3 ways federal student loan borrowers can have their debt forgiven—without the Supreme Court

The Supreme Court’s decision to block President Joe Biden’s plan to forgive up to $20,000 in student debt per federal borrower has left millions of Americans to deal with over $1 trillion in debt on their own. 

In a 6-3 decision on Friday, the justices found that Biden did not have authority to cancel $430 billion in student debt under the Higher Education Relief Opportunities for Students Act of 2003. 

Some may say the president’s loan forgiveness was a long shot in the first place, but the relief would have come easier than the paths to loan forgiveness currently available.

Public Service Loan Forgiveness (PSLF), Teacher Loan Forgiveness, and forgiveness through income-driven repayment (IDR) are three of the ways federal student loan borrowers can still avoid paying back the rest their loans. But each comes with a cost — whether it’s a decade or more of work or 20 years of varying monthly payments.

Here’s a look at the methods available to earn student loan forgiveness and whether they might be worth it for you.

• Time commitment: 10 years
• Payment requirement: Must be on an income-driven repayment (IDR) plan 
• Job requirement: Must work in public service

The Public Service Loan Forgiveness program is designed to support workers who keep the country up and running, including federal and local government employees, teachers, nurses and more. The program allows borrowers who hold qualifying positions to have their federal student loan balances cleared after 120 qualifying monthly payments.

However, it’s not easy to qualify. While you don’t have to stay at the same job for 10 years, you do have to stay in a qualifying organization or position for that period. And although there’s a variety of industries and jobs to choose from, many, like teachers and nurses, are historically underpaid.

That could mean your monthly student loan payment would be low, or even $0. On an IDR plan — which is required for those seeking PSLF — if you earn less than 150% of the federal poverty line, or $21,870 as a single-person household in 2023, you will have a $0 monthly payment. 

But depending on where you live and your other financial obligations, it may be difficult to make ends meet on a relatively low salary.

• Time commitment: 5 years
• Payment requirement: Must be on an income-driven repayment (IDR) plan 
• Job requirement: Must be a “highly-qualified” teacher in a school serving low-income students

Similar to PSLF, Teacher Loan Forgiveness incentivizes educators to work in under-served areas in order to see some or all of their student debt forgiven. Eligible teachers can have up to $17,500 in federal debt wiped out after working for five consecutive years in a qualifying school or educational service agency. 

Secondary school math and science teachers, as well as special education teachers, are eligible for up to $17,500 in relief, but highly qualified elementary and secondary school teachers who teach other subjects can receive up to $5,000.

You can receive relief through both Teacher Loan Forgiveness and PSLF, but not for the same teaching period. That means if you spend five years in a qualifying teaching position and get debt relief through the Teacher Loan Forgiveness program, any payments you made during those five years don’t count toward the 120 monthly payments required for PSLF.

• Time commitment: 20 or 25 years
• Payment requirement: Generally 10% to 20% of your discretionary income
• Job requirement: None

All federal student borrowers are eligible for one or more of the income-driven repayment (IDR) plans. Currently there are four IDR options available with varying eligibility requirements: Revised Pay as You Earn (REPAYE), Pay as You Earn (PAYE), income-based repayment (IBR) and income-contingent repayment (ICR).

Borrowers who make payments on an IDR plan are eligible to have any remaining balances forgiven at the end of their loan term. The plans have the following loan terms:

• REPAYE plan: 20 years for undergraduate borrowers; 25 years for graduate and professional studies borrowers
• PAYE plan: 20 years
• IBR plan: 20 years if you’re a new borrower on or after July 1, 2014; 25 years if you’re not a new borrower on or after that date
• ICR plan: 25 years

Time spent in economic hardship deferment or making payments on another repayment plan still count toward your loan term. Additionally, any time your income qualifies you for a $0 monthly payment counts toward your loan term.

All borrowers with federal loans are eligible for the REPAYE plan. This plan uses your income and family size to determine your monthly payment, which is capped at 10% of your discretionary income. Your discretionary income is any money you make annually over 150% of the federal poverty line.

IDR plans might be a great way to get some debt relief without being bound to a certain job or field. But contrary to the standard repayment plan, your monthly payment on an IDR plan will change depending on your income. That means the more money you make, the higher your monthly payment.

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