What To Do If You Don’t Qualify For Student Loan Forgiveness

Quick Answer

If you can't get forgiveness for your student loans, you may try to adjust your repayment plan, ask for deferment or forbearance, refinance your debt or seek a loan repayment assistance program.

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Student loan forgiveness programs provide either full or partial forgiveness to eligible borrowers with federal student loans.

But not everyone qualifies for forgiveness. The Biden administration has expanded opportunities for forgiveness through existing programs, including a recent change to income-driven repayment plans to make sure those who are eligible get the relief they've earned. But talks of widespread forgiveness remain stalled.

If you're not eligible for forgiveness, there are other ways to get relief. Here are four steps you can take.

1. Contact Your Lender to Discuss a New Repayment Plan

If you have federal student loans, there are several repayment plans available beyond the standard 10-year plan:

  • Pay As You Earn (PAYE) plan: This plan reduces your monthly payment to 10% of your discretionary income and extends your term to 20 years.
  • Revised Pay As You Earn (REPAYE) plan: This plan reduces your monthly payment to 10% of your discretionary income and extends your term to 20 or 25 years, depending on whether you have graduate or undergraduate loans
  • Income-based repayment plan: This plan reduces your monthly payment to 10% or 15% of your discretionary income, depending on when you started taking out loans, and extends your term to up to 25 years.
  • Income-contingent repayment plan: This plan reduces your monthly payment to the lesser of 20% of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years. It extends your term to 25 years.
  • Graduated payment plan: With this plan, your payments start out small and increase every two years over 10 years. If you consolidate your loans, though, it can go as long as 30 years.
  • Extended payment plan: If you have more than $30,000 in outstanding direct loans, you can get a fixed or graduated payment over 25 years.
  • Consolidation loan payment plan: If you consolidate your federal loans, you may be eligible to extend your repayment plan to as much as 30 years.

Unfortunately, private student loans don't come with these options. However, you may be able to contact your lender and talk about potentially modifying your repayment plan until you can afford your standard payments.

These repayment plans can make your monthly payments more affordable, and with income-driven repayment plans, you can also get forgiveness after you complete your repayment term.

However, all of them will result in more interest charges over the life of your loan, and income-driven repayment plans will result in higher payments over time as your income grows.

2. Consider Forbearance or Deferment

Whether you have federal or private student loans, you may be able to get on a forbearance or deferment plan. These plans can provide you with relief in the form of paused payments for a short period of time—typically three months, but some lenders and servicers allow you to extend beyond that.

Forbearance and deferment plans can be helpful if you're experiencing temporary financial hardship. Keep in mind, though, that pausing payments doesn't mean you don't have to pay them later, and any interest that accrues during that time will be capitalized and added to your balance at the end of the forbearance or deferment period.

3. Refinance Your Student Loans

If you have good credit and a solid annual income, you may be able to refinance your student loans and secure a lower interest rate, lower monthly payments or both. You can only refinance your loans with private lenders; federal student loan providers do not offer this option.

Student loan refinance companies offer terms ranging from five to 20 years, giving you some flexibility with your repayment. And if you can get a lower interest rate than what you're paying now, you could save hundreds or even thousands of dollars in interest.

That said, refinancing student loans is generally better for private loan borrowers because refinancing federal loans causes you to lose access to income-driven repayment plans, many loan repayment assistance programs and more.

Additionally, even if you're eligible to refinance, you may not be able to qualify for a lower interest rate if your credit score or income isn't in good enough shape.

4. Get Student Loan Repayment Assistance

Whether you have federal or private student loans, you may be able to get help from your employer or a government agency.

There are many programs available from federal and state government agencies that offer repayment assistance for those who work in education, public defense, health care, the military and more. Note, however, that these programs typically require you to have federal student loans.

Additionally, many private employers offer student loan repayment assistance as an employee benefit, and it doesn't matter whether your loans are federal or private.

Student loan repayment assistance can wipe out thousands or even tens of thousands of dollars in student loan debt. Each program and employer has a different approach, however, and you may need to commit to working in a role or field for a predetermined amount of time to qualify.

Make a Plan for Your Student Loans

Every situation is different, so there's no single best way to approach paying off student loans. The important thing is that you take the time to research your options and figure out which approach works best for you.

As you determine your strategy, continue to pay your loans on time to build your credit and avoid late charges. Also, use Experian's free credit monitoring service to keep track of your progress in building credit and address potential problems that could impact your credit as they arise.

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