How to Get Student Loan Relief

Amy Fontinelle has more than 15 years of experience covering personal finance, corporate finance and investing.

Vikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.

The three-year pause on federal student loan payments imposed as a COVID-19 relief measure is over, and the bills started coming due again in October 2023. A subsequent Biden administration plan to forgive billions in student debt went down in flames at the Supreme Court.

That's not the end of the story. The White House has unveiled new programs that help distressed borrowers lower their monthly payments to a reasonable level. Even student loan forgiveness is still possible for some public service employees, non-profit workers, and disabled people.

Key Takeaways

• The Saving on a Valuable Education (SAVE) plan is designed to lower monthly payments for student loan borrowers based on income and family size, but a federal appeals court blocked it in July 2024 pending the outcome of litigation.
• Payments can be reduced to $0 per month in some cases.
• Despite the Supreme Court ruling, loan forgiveness is still available for some public service workers, non-profit employees, and disabled people.
  

Federal Student Loan Forbearance Ends

The Coronavirus Aid, Relief and Economic Security (CARES) Act granted federal student loan borrowers automatic forbearance for loans owned by the U.S. Department of Education. The pause on repayments, originally passed on March 13, 2020, was extended repeatedly and finally expired on Oct. 1, 2023.

Interest charges began accruing on Sept. 1, 2023, and the monthly bills started going out again in October.

The loan forbearance program meant:

• Your interest rate was 0%.
• You didn't have to make payments.
• You weren't charged any late fees.
• Interest didn't accrue.
• The interest you owed on March 12, 2020, was not added to your principal balance.
• You didn't have to contact your loan servicer to request these benefits if you were eligible for them.

The American Rescue Plan, passed by Congress and signed by President Biden in March 2021, included a provision that student loan forgiveness issued between Jan. 1, 2021, and Dec. 31, 2025, will not be taxable to the recipient.

The Saving on a Valuable Education (SAVE) Plan

Thwarted by the Supreme Court ruling against a massive student loan forgiveness program, the Biden-Harris administration immediately rolled out their next strategy for student loan relief—the Saving on a Valuable Education (SAVE) plan. The SAVE plan is an income-driven repayment (IDR) plan that promises to lower or eliminate loan payments depending on your discretionary income.

On July 18, 2024, a federal appeals court blocked the SAVE plan until two court cases centered around the IDR plan can be resolved. The Department of Education has moved borrowers enrolled in the SAVE plan into an interest-free forbearance while the litigation is ongoing. It has also outlined options for borrowers who were nearing Public Service Loan Forgiveness (PSLF)—borrowers can either "buy back" months of PSLF credit if they reach 120 months of payments while in forbearance or switch to a different IDR plan.

Benefits for Borrowers

The SAVE plan is open to anyone with an eligible loan. While similar to last year's Revised Pay As You Earn (REPAYE) plan, the SAVE plan has additional benefits and is more widely available. People who enrolled in REPAYE will automatically be added to SAVE.

• Reduce the percent of discretionary income used to determine loan payments: The REPAYE plan required payments of 10% of discretionary income on undergraduate loans. The SAVE plan lowers that to 5%. For borrowers with both undergraduate and graduate loans, the amount will be a weighted average between 5% and 10%.
• Adjust what counts as discretionary income: On prior plans, discretionary income was 150% of their adjusted gross income over the federal poverty guidelines. The SAVE plan raises the income limit to 225% of the poverty guidelines, making the plan accessible to many more borrowers. For some borrowers, their monthly payments will be $0. For those making more, the government expects most borrowers to save up to $1,000 per year.
• Forgive some loan interest. For example, if your loan payment is $25 monthly, but your loan accrues $35 in interest, the additional $10 will not be added to your balance. For borrowers making extremely low payments, this means their loan amount will not grow as long as they are making payments.
• Forgive some payments: While prior programs expected 20 years of payment before forgiveness, the SAVE plan lowers this threshold for low-balance borrowers. If your original loan amount was under $12,000, loans can be forgiven after 120 qualifying payments. Each $1,000 over that amount requires 12 additional payments, with undergraduate loans capping out at 20 years and graduate loans at 25 years. If loans were consolidated, payments made before consolidation count towards the payment total.

SAVE Loan Eligibility

Since the SAVE plan is a federal program, only the following loans are eligible:

• Direct subsidized loans
• Direct unsubsidized loans
• Direct PLUS loans for graduate and professional students
• Direct consolidation loans that did not repay PLUS loans made to parents

Other loans may be eligible if first consolidated into a direct consolidation loan. Loans made to parents for their children or loans in default are not eligible for the program.

Timeline and How to Apply

Borrowers who were signed up for the REPAYE program were automatically transferred to the SAVE plan. Anyone else eligible can apply.

The application is available online at StudentAid.gov, and it takes roughly 10 minutes to fill out. To apply, log into StudentAid.gov. You'll need your financial information, personal information, and your spouse's information if married filing jointly.

Other Student Loan Relief Programs

Despite the Supreme Court decision, student loan forgiveness is still available to certain people in certain circumstances. Those most likely to be eligible include teachers and other public service employees, workers at non-profit organizations, and disabled people.

• Public Service Loan Forgiveness: The PSLF program offers loan forgiveness after 10 years of payment for borrowers who work in a field that benefits their community, such as healthcare, fire departments, social work, or government agencies.
• Income-Based Repayment: IBR allows qualifying borrowers, regardless of industry, the opportunity to pay 10%–15% of their discretionary income in payments. They are eligible for forgiveness after 20 or 25 years.
• Teacher Loan Forgiveness: If you have been a full-time elementary or secondary teacher for at least five years in a low-income school, you may qualify for up to $5,000 in loan forgiveness. Math and science teachers may qualify for up to $17,500.
  

Check Your State's Website for Relief Options

Visit your state's website to see what student loan relief options lenders are providing where you live. Depending on your industry, you may be eligible for state-funded relief.

You can visit your loan servicer's website to see what options they're offering all borrowers, and you can also call or email your loan servicer to find out what specific options may be available to you, given your circumstances.

Besides the possibilities described above, you may also be able to request economic hardship or unemployment deferment. You may also be able to get a temporary reduction in your interest rate or a loan modification.

When Do Student Loan Payments Resume?

Student loan payments resumed in October 2023. Interest began accruing on federal loans on Sept. 1, 2023.

Will Biden Extend the Student Loan Pause?

The student loan payment pause is done for good. The monthly bills started going out on Oct. 1, 2023.

Is the SAVE Plan the Same As Student Loan Forgiveness?

The SAVE plan, currently blocked by a federal appeals court pending litigation, would reduce monthly payments on student loans for eligible borrowers, based on their discretionary income. In some cases, it includes partial loan forgiveness but only after years of steady repayment.

The far more ambitious one-time student loan forgiveness plan was deemed unconstitutional by the U.S. Supreme Court and will not go forward.

A limited number of borrowers are eligible for student loan forgiveness. They include some public service employees and workers for non-profit organizations. Outright loan forgiveness is available only to some public service workers, non-profit employees, and disabled people.

Will Student Loans Be Forgiven Under the SAVE Plan?

Many borrowers could reach loan forgiveness eventually through the SAVE plan depending on the outcome of litigation. It could put an end date on the loan repayments after a certain number of years for those with low initial balances. A one-time adjustment for past payments also would move the needle by counting all months in repayment, even if the borrower was in deferment or forbearance.

The Bottom Line

Student loan forbearance was one of the longest-lasting pandemic-relief measures, but it ended for good in October 2023.

If you are having trouble meeting your student loan commitments, consider applying for relief through the SAVE program if it is reinstated. It could lower your monthly bill to a manageable level.

1. Supreme Court of the United States. "Biden, President of the United States, et al. v. Nebraska et Al."
2. Congressional Research Service. "Student Loans: A Timeline of Actions Taken in Light of the COVID-19 Pandemic," Page 1.
3. Federal Student Aid. "COVID-19 Emergency Relief and Federal Student Aid."
4. U.S. Congress. "H.R.1319 - American Rescue Plan Act of 2021," Section 9675.
5. Federal Student Aid. "SAVE Plan Offers Lower Monthly Loan Payments."
6. U.S. Department of Education. “Department of Education Updates on Saving on a Valuable Education (SAVE Plan).”
7. The White House. "Fact Sheet: The Biden-Harris Administration Launches the SAVE Plan, the Most Affordable Student Loan Repayment Plan Ever to Lower Monthly Payments for Millions of Borrowers."
8. Federal Student Aid. "Public Service Loan Forgiveness (PSLF)."
9. Federal Student Aid. "Income-Driven Repayment Plans."
10. Federal Student Aid. "Teacher Loan Forgiveness."
11. Federal Student Aid. "Prepare for Student Loan Payments To Restart."
12. Federal Student Aid. "Student Loan Forgiveness."

Public Service Loan Forgiveness (PSLF) allows eligible federal student loan borrowers to have some of their debt forgiven when certain conditions are met.

A Stafford loan is a type of fixed-rate loan available to college and university undergraduate, graduate, and professional students attending college at least half-time.

An award letter is the FAFSA documentation sent from a college or university to the student that details how much financial support the student is eligible for.

An income-share agreement (ISA) is a contract that allows a student to receive upfront money for college in exchange for a fixed percentage of their future income.

Student Aid Index (SAI) is the name for the factor that determines needs-based financial aid—and there have been several changes to the equation.

Tuition insurance is a type of insurance policy that covers the financial losses associated with a college student dropping out before completing their degree.

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