In case you missed it, the Biden administration proposed a broad student loan forgiveness program in 2022 that would cancel up to $20,000 in federal loans for qualified borrowers with individual income of less than $125,000 or household income less than $250,000.1 The program stopped accepting applications in fall 2022 as challenges resulted in a court injunction blocking broad student loan forgiveness.2 In June 2023, the Supreme Court ruled that the Biden administration can’t grant broad student loan forgiveness via the HEROES Act—a 2003 law that gives the Secretary of Education the authority in certain emergency circumstances (ahem, COVID-19) to waive or modify rules relating to student financial assistance programs. And the administration can’t appeal.
So what's next for you? Borrowers who have had their loan payments paused were expected to start repaying them in October 2023, though interest resumed starting on September 1.3 In response to the Supreme Court's ruling, the Biden administration announced new programs that could help borrowers—and that the Department of Education is exploring an alternative path to debt relief. Details TBD.
In the meantime, keep reading to feel empowered to take control of what you can control—which, luckily, is a lot. Here are steps for preparing to repay your loans—and ideas to consider for paying off your student loans fast.
1. Know your basic repayment options
There are federal programs besides standard payment plans that may make it easier to afford your payments. These include:
- The Saving on a Valuable Education (SAVE) plan is a new income-driven repayment plan that will lower monthly loan payments, forgive loan balances after 10 years of payments, prevent loan balances from growing due to unpaid interest, and in some cases even eliminate payments for those who qualify. You can sign up for this plan now here. (If you already signed up for the REPAYE plan that was announced earlier this year, you’ll be automatically signed up for SAVE.)
- Income-driven repayment plans set your monthly student loan payment at an amount that takes into account your income and family size. Enrolling could lead to halved monthly payments for millions of borrowers—and for small-balance loans, hitting forgiveness after making about half as many payments as the existing plan calls for.
- The graduated repayment plan starts with lower payments that then increase every 2 years.
Your state may also offer a repayment or even a forgiveness program, and you may be able to take advantage of them and federal programs at the same time. Contact your state's higher education agency to learn more.
2. Look into career-focused repayment and forgiveness programs
Based on your career and/or degree, you may qualify for student loans that offer lower interest rates and/or longer grace periods for repayment than the standard options. You may even be able to score forgiveness. These programs include:
- Public Service Loan Forgiveness Program, for which employees of federal, state, local, tribal, and nonprofit organizations may qualify
- The Federal Student Loan Repayment Program, for which employees of federal agencies may qualify
- The Teacher Loan Forgiveness Program, for eligible teachers who work in low-income schools or educational service agencies
- The Department of Justice Attorney Student Loan Repayment Program, for eligible attorneys who are selected for a 3-year period of service with the Department of Justice
- The Veterinary Medicine Loan Repayment Program, for eligible veterinarians who commit to a 3-year period of service in a designated veterinary shortage area
- National Health Service Corps Loan Repayment Programs, for certain health professionals
- Student loan repayment programs for certain dental professionals
You're not out of luck if your industry isn't on this list. Smaller career-focused programs are out there, and your school may even offer loans for certain degrees of study. It's worth an online search to check.
Plus, your employer may offer a student debt assistance benefit. Check with your human resources department to see if one is available to you.
3. Get your budget in shape
Now that the pause has ended, get familiar with your current money situation—and how that has changed since you have had to make payments again.
You could start with a budgeting tool, such as Fidelity's budget worksheet, or use a simple spreadsheet. Write out your monthly income—counting all the money coming in on a regular basis, after taxes and any retirement contributions are taken out. Then, list out your monthly expenses. Fidelity has a simple budgeting guide.
4. Tackle debt wisely
Getting your debt under control can be complicated if you have multiple loans or kinds of debt. That's where these suggestions fit in.