More than half a million student loan borrowers have qualified for some form of student loan forgiveness since President Joe Biden took office. But so far, the White House has not pushed through the widespread student debt cancellation the president promised on the campaign trail.
However, the Biden administration is still discussing "broad" student loan cancellation, Secretary of Education Miguel Cardona told CNBC at a Wednesday town hall.
"Our conversations are ongoing with the Department of Justice and the White House on those issues," Cardona continued, referring to widespread student loan forgiveness.
With mounting pressure from top Democratic lawmakers like Senate Majority Leader Chuck Schumer, as well as the progressive voters who put Biden in office, the issue of federal student loan debt forgiveness remains a priority at the White House.
It's still uncertain whether the Department of Education will move to cancel debt via an executive order from Biden, or if college graduates will need to rely on Democrats and Republicans in Congress to come together to enact student loan forgiveness legislation.
Even if widespread student loan cancellation is put in place by the Education Department, it won't benefit all borrowers. High-income earners won't likely qualify, and private student loans won't be forgiven.
Keep reading to learn what you can do if you won't be eligible for a student loan discharge, including student loan refinancing. If you decide to refinance, visit Credible to compare interest rates across multiple private lenders to ensure you're getting the best possible rate for your situation.
What to do if you don't qualify for student loan forgiveness
The Biden administration has canceled $9.5 billion worth of student loan debt so far, but only a portion of borrowers have qualified for forgiveness. Here are a few ways to manage your college debt if you won't qualify for student aid programs like loan cancellation.
Refinance your student loans for better terms
Private student loan refinancing is when you take out a new loan to repay your current student debt. By refinancing to a lower rate, you may be able to save money on your monthly payments, get out of debt faster and save money on interest over time.
Student loan rates are near historic lows, according to data from Credible, making it a good time to lock in a better rate on your college debt. However, refinancing your federal student loans to a private loan makes you ineligible for federal benefits like income-driven repayment plans, COVID-19 deferment and debt forgiveness programs like Public Service Loan Forgiveness (PSLF).
But since private loans wouldn't likely qualify for cancellation anyway, you have nothing to lose by refinancing your private student debt to a lower rate.
Compare student loan rates in the table below, and visit Credible to see your estimated rate without impacting your credit score.
Enroll in an income-driven repayment plan
Many federal student loan borrowers feel unprepared for monthly payments to resume when the administrative forbearance period ends early next year, according to a recent survey. If you want to lower your federal student loan payment, consider enrolling in an income-driven repayment plan (IDR plan).
IDR plans limit the amount of your monthly loan payment to 10-20% of your monthly gross income, depending on the kind of federal loans you have. You can enroll for free by signing in to your account on the Federal Student Aid website.
Make extra payments on your student loans
There's a simple rule when it comes to borrowing money: the faster you can pay off your loans, the more money you'll save in interest over time. This same strategy applies to student loan debt.
If you can afford to make extra payments on your student loans — whether you have federal Direct Loans or private loans — you have the potential to save thousands of dollars over the course of your debt repayment. Use a student loan payment calculator to see how much you can save on interest by making extra payments.
Be sure to also get in touch with a knowledgeable loan officer at Credible to clear any confusion about student loan consolidation, repayment or forgiveness.
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