The U.S. Department of Education recently announced that it would automatically discharge $5.8 billion worth of federal student loan debt of more than 323,000 borrowers with a total and permanent disability (TPD). This was the largest student loan forgiveness measure put in place since President Joe Biden took office, but it's not the first time the Biden administration canceled federal student loans.
In total, the Education Department under Biden has forgiven about $8.7 billion worth of federal student loan debt for roughly 455,000 borrowers, according to a press release. Keep reading to see if you qualify for student loan forgiveness and learn more about what you can do to reduce your student loan debt, including student loan refinancing.
Current student loan refinance rates are near record lows, according to data from Credible. You can check your estimated rate without impacting your credit score to determine if refinancing is right for you.
Who has qualified for student loan forgiveness under Biden?
As a presidential candidate, Biden campaigned on canceling up to $10,000 worth of federal student loan debt per borrower. But as of today, the Biden administration has only forgiven a fraction of the $1.7 trillion in student debt owed by 45 million Americans.
Here's who has qualified for student loan forgiveness so far, according to the Education Department:
- Borrowers with a total and permanent disability: The Education Department discharged $1.3 billion in federal student loan debt for approximately 41,000 borrowers who qualified under TPD in late March. Then on August 19, the Department announced it would forgive an additional $5.8 billion worth of debt for over 323,000 more TPD borrowers by the end of 2021.
- Borrowers who were misled by their schools: The Department discharged more than $1.5 billion worth of federal student loan debt for 92,000 borrowers who applied to have their student loans forgiven via the borrower defense to repayment program.
Additionally, the Biden administration extended the pause on student loan repayment to January 31, 2022, which impacts 41 million federal student loan borrowers.
Private student loan borrowers haven't qualified for student loan forgiveness under the Biden administration, and they don't qualify for the other emergency COVID-19 relief measures like administrative forbearance. If you have private student loans and can't afford to pay your loans, consider refinancing to a lower interest rate or a longer loan term by visiting Credible to lower your monthly payments.
What to do if you don't qualify for student loan forgiveness
Student loan cancellation measures under the Biden administration have been limited to borrowers who meet certain eligibility requirements. Not all borrowers are eligible to have their student loan debt forgiven under current legislation. Still, there are other things federal and private student loan borrowers can do if they're having trouble repaying student loans:
- Enroll in an income-driven repayment plan (IDR). Borrowers with federal student loans can enroll in an IDR plan, which limits your student loan payments to a portion of your disposable income, typically 10-20%. You can enroll on the Federal Student Aid (FSA) website.
- Apply for additional federal forbearance. Federal borrowers who are unable to make their student loan payments when forbearance ends can apply for economic hardship deferment or unemployment deferment to have their payments paused for up to an additional 36 months.
- Refinance your private student loan debt. Since private student loans aren't impacted by federal forgiveness or forbearance measures, borrowers can consider refinancing to pay off their debt faster or lower their monthly payments.
It's important to note that federal student loan borrowers should think twice before refinancing to a private student loan. Doing so would make them ineligible for federal protections like IDR plans, COVID-19 administrative forbearance, and even Public Service Loan Forgiveness (PSLF).
Private student loan borrowers who haven't yet refinanced should consider doing so while rates are near historic lows. Refinancing your private student loan debt to a lower interest rate can help you save thousands of dollars over the life of the loan. The table below shows current student loan rates from real private lenders through Credible's marketplace.
See if student loan refinancing is right for you
Private student loan refinancing can help you save money on interest payments, but it's not right for everyone. For example, it's not recommended that borrowers refinance their federal student loans, since refinancing to a private loan would make you ineligible for federal student aid measures like COVID-19 emergency relief and even potential student loan forgiveness programs.
But borrowers who have private student loan debt should consider refinancing while rates are historically low. During the week of Aug. 9, 2021, borrowers with credit scores of 720 or higher who refinanced their student loans on the Credible marketplace saw the following interest rates:
- 10-year fixed-rate student loans: 3.46%, down from 4.23% one year ago
- 5-year variable-rate student loans: 2.59%, down from 3.00% one year ago
There are no fees to refinance your private student loans, making it a surefire way to save on your college debt as long as you can secure a lower interest rate. You can compare student loan rates across multiple private lenders at once by filling out a single form on Credible.
Have a finance-related question, but don't know who to ask? Email The Credible Money Expert at email@example.com and your question might be answered by Credible in our Money Expert column.