Estimate Time4 min

What's going on with student loans?

Key takeaways

  • Federal repayments resumed in October 2023.
  • With more changes to student loan repayment programs announced, we'll help you make sense of the news.

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. 

Fidelity Smart Money

Feed your brain. Fund your future.

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 aimed at helping borrowers who:

  • Owe more than they originally borrowed due to high interest
  • Qualify for forgiveness through programs like the SAVE plan or Public Service Loan Forgiveness but are not enrolled
  • Have been in repayment for 20 years or more
  • Attended colleges that lost certification or eligibility to participate in the federal student aid program or didn’t provide sufficient value
  • Are experiencing hardship, like a medical expense, that prevents them from paying back loans
  • The proposed plan will have to go through a public comment period, which could change some of the proposal before it’s finalized and takes effect. It might also face legal challenges, which could delay or even derail things. But if the plan goes through, about 25 million student loan borrowers could see their balances reduced or totally discharged, some as early as fall 2024.4

    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:

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.

Is there a better way to pay off student loans?

Use our student debt dashboard to evaluate repayment options.

More to explore

1. "One-time Federal Student Debt Relief," Federal Student Aid, 2. Nate Raymond, "US stops taking student debt forgiveness applications after ruling," Reuters, November 11, 2022. 3. 4. Michael D. Shear, “Biden Announces Student Debt Relief for Millions in Swing-State Pitch,” The New York Times, April 8, 2024.

Investing involves risk, including risk of loss.

The third parties mentioned herein and Fidelity Investments are independent entities and are not legally affiliated.

Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

This information is intended to be educational and is not tailored to the investment needs of any specific investor.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917