How to Find Student Loan Debt Relief

Emergency measures due to the COVID-19 pandemic temporarily suspended student loan payments and interest charges for millions of borrowers. But that temporary student loan debt relief expired in September 2023, and payments restarted in October 2023. Efforts by the Biden administration to cancel a portion of student loan debt for millions of borrowers fell short thanks to court challenges. Even apart from executive actions and emergency COVID-19 student loan debt relief programs, there are a variety of ways borrowers can make their student loans easier to manage.

This article covers options ranging from student loan forgiveness to income-driven payment plans and debt forbearance.

How Do I Get Relief From My Student Loan Debt?

Today’s high post-COVID-19 student debt levels make it easy to understand why many borrowers are looking for student loan debt relief. According to Pew Research, in June 2024, Americans owed about $1.6 trillion in student loan debt. So what options do borrowers have?

The answer depends greatly on whether you have federally sponsored student loan debt or debt issued solely by a private lender.

Government loans

Most student loan debt balances are in government-backed programs. 

That probably made a difference when you first got your loan. Federal student loan programs help make education available to people who otherwise couldn't afford it. Federal loans also come with interest rates that are lower than they would be from other lenders.

The benefits of federal student loan programs extend beyond the initial loan. Those programs offer a variety of debt relief options to struggling debtors. 

Private lenders

Despite the advantages of federally backed student loans, some borrowers have private loans. This may have been because they didn't qualify for federally backed loans, or because they exceeded the available limits on those loans. 

People with private student loan debt have fewer debt relief options, but there are still ways to cope.

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Here are a few options for student loan debt relief.

Income-driven repayment

Each student loan has a repayment schedule with a specified monthly payment. But what if you don’t make enough money to afford those payments?

To help in those situations, federal student loan borrowers have an option called income-driven repayment, or IDR.

There are four different types of IDR programs available. Your eligibility depends on the type and timing of your loan. These programs have two defining characteristics.

First, they limit your monthly payments to a certain percentage of your income. This may be anywhere from 10% to 20% of discretionary income, depending on the specific IDR program. 

Discretionary income means the amount of your income over and above a certain minimum amount needed to support yourself. So, if you sign up for an IDR program, you’ll pay the lesser of your originally scheduled payment or this percentage of income.

If those reduced payments mean you don’t fully pay off your loan within a certain number of years, any remaining loan balance is forgiven. That time period is between 20 and 25 years, depending on the IDR program.

Income-based repayments don’t happen automatically—you have to sign up for them. And if your monthly payment doesn’t cover at least the interest due, your student loan balances will continue to grow. However, this plan can help keep your monthly payments affordable.

Student loan forbearance

Forbearance means a temporary pause on required payments. It doesn’t mean those payments are forgiven. It simply pushes your repayment schedule back to give you more time before you have to resume making payments. Lenders add missed payments to the loan balance. 

The COVID-19 emergency relief program that suspended federal student loan payments was an example of forbearance.

A key issue with forbearance is whether interest will continue to accrue during the forbearance period. If interest accrues, it means the balance you owe will grow during the forbearance period. That’s because you’re still being charged interest from month to month, but not paying anything.

The forbearance on federal student loan payments included a suspension of interest charges. However, forbearance doesn't always suspend interest, so make sure you find out before you agree to a forbearance program. 

If interest accrues and you don’t pay at least that much each month, the interest will be added to your loan balance. Then you’ll pay interest on the new, higher amount. That’s called interest capitalization.

Forbearance may be available on federal student loans under some circumstances. While private lenders may not have a formal forbearance program, you may be able to negotiate with them if you can demonstrate that you need time to get your payments back on track. 

With any lender, it’s always preferable to try to make a formal forbearance agreement rather than simply stopping your payments.

Student loan forgiveness

Student loan forgiveness means part of your loan balance is simply wiped off the books. 

Federal student loans have a variety of programs to forgive all or part of the balance you owe under certain circumstances. This usually involves working for a specified number of years in certain occupations. Examples include teaching, government or nonprofit work, the military, or an approved AmeriCorps program. 

Under extreme circumstances, it may be possible to have a private lender forgive some of your loan balance. However, this is rare, and most likely to happen as part of a negotiation in which the lender settles for partial payment if it’s clear you can’t pay all of what you owe. 

Depending on the circumstances, student loan forgiveness may have a negative impact on your taxes and/or your credit history.

Student loan refinancing

Refinancing involves replacing one loan with another. There are two ways this could make your loan payments more affordable.

If you can get a new loan at a lower rate than your existing loan, your monthly payments could go down. Or you might end up paying less interest over the life of the loan. Just be sure to factor in any fees involved in refinancing when you figure out whether it would truly save you money.

If your refinance loan extends the time it takes to pay off your balance, it can reduce your monthly payments by spreading what you owe over a longer time. However, in that case, you're likely to pay more interest over the life of the loan. 

Take special care when refinancing from a federal student loan to a private one. If you do so, you lose your chance to take advantage of any federal student loan debt relief programs. 

Student loan consolidation

Finally, if you are managing multiple student loans and want to streamline and potentially lower your payment, you might consider consolidating your student loans. 

When you consolidate, you get a new loan and use it to pay off multiple debts. You end up with a single payment, possibly with a lower interest rate or a longer pay-off period (either of which could lower your payments). It’s possible to consolidate federal student loans with a federal consolidation loan and protect your access to federal debt forgiveness options like those discussed above. 

Consolidating comes with a few potential downsides, though. If you stretch your loan out with a longer repayment period, you’ll be making the payments for longer and may end up with more interest. And if you consolidate multiple federal loans into one through a private lender, you’ll lose some benefits and protections of those loans, like potential loan cancellation benefits. 

What Is Certified Student Loan Debt Relief?

It’s important to make a distinction between certified student loan debt relief programs and unofficial ones. 

There are a variety of official student loan debt relief programs available for federal loans. Private lenders are less likely to have formal programs, but there are still actions you can take individually. 

These include refinancing or negotiation with your lender. There are debt relief services that may be able to help you with those negotiations. 

Whether it’s a federal student loan or a private one though, be wary of student loan debt forgiveness scams. 

Avoiding Student Loan Debt Forgiveness Scams

The Department of Education warns that borrowers may receive a variety of phone calls, text messages, and emails offering debt relief programs that are scams. 

These scams may involve trying to get sensitive data out of you, such as your Social Security number or bank account information. Or, they may pressure you to pay money upfront for debt relief that never materializes. 

Two warning signs of scams are people who put urgent deadline pressure on you to make a decision and those who offer something that seems too good to be true. 

Your best defense is that when exploring debt relief options, make sure you’re dealing with an authorized representative of your debt servicer. 

Is Bankruptcy an Option for Student Loan Debt Relief?

Bankruptcy is a legal process in which a court decides which debts you can repay and which need to be discharged (forgiven).

Historically, it's been very difficult to get student loans wiped off the books through bankruptcy. That’s because you have to prove that paying back those loans would cause “undue hardship” for an extended period of time. 

That may be changing, as the student loan crisis prompts courts to take a softer stance toward this debt. Even so, a big reason to think twice before pursuing bankruptcy for student loan debt relief is that bankruptcy is a public filing that stays on your credit history for up to 10 years. It will probably limit your ability to get credit for several years, and it may even prevent you from working in certain careers and industries. 

Alternatives to Bankruptcy for Student Loan Debt Relief

You likely have less drastic options than bankruptcy for student loan debt relief. These measures include seeking forbearance, signing up for an income-driven repayment program, or refinancing your loan.

If you are unable to find a solution on your own, you might benefit from the services of a debt counselor or debt relief program. 

In short, there are solutions if you take action. Don’t sit back and let your student loan debt get the best of you.