Skip to content

Student Loan Forgiveness: The Ongoing Debate and Its Effect on College Affordability

couple meeting with a financial counselor

Student loan forgiveness can improve the lives of millions of students in the United States. But things are not so simple. Despite the Biden administration’s continuous efforts to implement a student debt relief program, there are legal and financial obstacles. So the matter is now with the Supreme Court. The future of student loan forgiveness is uncertain, but yours doesn’t have to be. You can still make a few smart moves to lower your loan payments and cut your losses.

The State of Student Debt that Made Public Service Loan Forgiveness a Necessity

The United States has the second-highest student loan debt in the world, following the United Kingdom. This is because college and university expenses are relatively higher in the U.S. Federal student aid undergoes several changes every year, from lower interest rates to broader applicability, depending on the state of the economy and the outstanding debt.

Father grabbing his son's shoulders  during graduation
The United States has the second-highest student loan debt in the world (Image Source: Shutterstock)

The Past

Federal student loans were first offered in 1958 to promising students in the United States.

The FFEL Program loans, also known as the Federal Family Education Loan Program, were introduced in 1965. They allowed banks and private institutions to provide federal loan payments to students in need.

The United States Department of Education was formed in 1979. Its sole function was to provide student loan debt relief and encourage more people to seek higher education. The government could no longer give direct loans to student borrowers until the Student Loan Reform Act of 1993.

Many private student loans were discontinued during the Great Recession. But the outstanding debt only increased.

During the coronavirus pandemic in 2020, the federal government announced administrative forbearance and set the student loan interest rates to 0%. This administrative forbearance was extended to October 2021 by the Biden administration.

The Present

As of 2023, the student loan debt in the U.S. is over a trillion dollars. The Supreme Court has blocked Biden’s debt relief plan. Student debt cancellation is still being debated, and it is not known how many students (if any) will have their debt forgiven.

The Future

In January 2023, the Department of Education announced that it had already accepted the applications of over 16 million students for loan forgiveness. Whether these federal student loan borrowers are given their debt relief or not is up to the Supreme Court.

This federal student loan forgiveness program could encourage thousands of students to study further. It could mean a debt-free life for Pell Grant recipients.

Student Loan Forgiveness Program

Students are the future of a nation. The Department of Education has taken several steps to ensure the success of millions of students in the States. The FFEL program loans, the Public Service Loan Forgiveness (PSLF), and the Perkins loan are a few examples of its services.

How Biden’s student loan forgiveness program will work ︱ CBS News

Biden Administration and Student Debt Relief

On August 24, 2022, President Biden announced a debt relief of up to $20,000 for students. The purpose of this student loan forgiveness plan was to make education accessible for all.

But this initiative has not been implemented. The Supreme Court has raised several concerns over its impact on the U.S. economy, and the debate is still ongoing.

The Biden administration previously introduced the borrower defense to a repayment plan, a limited Public Service Loan Forgiveness (PSLF) waiver, and modifications to the income-driven repayment plans.

The Requirements for Loan Forgiveness

The requirements for the student loan forgiveness program are simple. You should be earning under $125,000 a year. You can still apply even if you are using other forms of federal student aid. Your remaining loan balance also does not matter.

The Effects of Student Loan Forgiveness

The student loan forgiveness plan could make things easier for students who have a lower income, such as women and people of color.

But the plan is a temporary fix. It will only help current borrowers, since it introduces no reduction in the educational and living costs of future federal student loan borrowers.

Young couple working together to figure out their debt.
Avoid financial problems by practicing good spending habits (Image Source: Shutterstock)

Furthermore, it could increase inflation, since the government will pay the debt relief for millions of students. These funds could be used on other resources.

Don’t Get Tangled in Federal Student Loans

Although federal student loans offer flexible terms and conditions compared to private loans, their variable interest rates can still be a pain to deal with. So, you must take a few steps to avoid getting stuck in overwhelming loans altogether.

And since there’s no guarantee of student loan forgiveness, you should learn how to manage your student loans and not get scammed by your loan servicer.

Here are a few tips to help you out.

Hire a Credit Counselor

If you are not good at managing finances, you can hire a credit counselor to give you a management plan according to your needs. This will protect you from bad decisions that can worsen your debt scenario.

Smiling credit counselor and family shaking hands
You can hire a credit counselor to give you a management plan (Image Source: Shutterstock)

Try Refinancing

Refinancing is an effective method frequently used around the world to pay loan payments before the due time by taking a new loan at better interest rates. This can save you a handsome amount for your student loan payments. You should compare multiple lenders and decide on whatever plan suits you the most.

Use an App

Some student loan borrowers also use apps that automatically pay their federal student loans to avoid late payments. These apps also offer additional discounts.


Bargaining with your loan servicer if you plan to refinance can also help with debt relief. Your lender may be willing to conform to your proposed rates to keep their business going because of the immense competition among lenders regarding interest rates.

You can also use someone else, preferably a family member, with a good credit score as a cosigner to get a low-interest loan package more easily.

Join a Community College Instead

Choosing a community college over an expensive institution can be a game-changer. Their loan programs usually have low interest rates, as well.

Do an Online Course and Focus on Skills

Shifting to online classes can help you save up if you cannot afford to pay the student debt at the moment. You will also not have to pay for transport and other facilities. There are also free certificate courses available online from well-respected universities.

woman wearing headphones watching webinar and writing notes
Keep in mind that your skills are your most important asset (Image Source: Shutterstock)

Keep in mind that your skills are your most important asset. Degrees will only get you so far. So focus on earning experience along with attending lectures.

Apply for Loan Cancellation

Apply for a student loan discharge before it’s too late. If you think you will not be able to pay off the debt in time, cancel the loan instead of delaying your monthly payments. Don’t wait for the Department of Education to come to your rescue.

Missing monthly payments will put you under the defaulted loans list. This can create a negative impression of your credit history and make you susceptible to higher interest rates.

The conditions for debt cancellation vary according to the loan program. Consult your loan servicer for the details. Most federal and private loans can easily be canceled once you prove that your reasons are valid.

Do Not Rely on Student Loan Forgiveness

President Biden’s initiative could make things a lot easier. But it is not guaranteed. So instead of planning your budget around the student loan forgiveness program, educate yourself about indirect and direct loans, interest rates, and their relationship with inflation. Look for ways to borrow less. Avoid financial problems by practicing good spending habits.