If you're staring at a pile of student loan debt wondering what you're going to do about it , you're not alone .
65 percent of college students take out student loans as a form of payment . Currently , Americans owe $ 1.6 trillion in student loan debt with individual borrowers owing an average of $ 39,351.
It's the second - highest form of debt in the U.S. , only preceded by home mortgages .
Conversations about forgiving student loan debt have become more prevalent since the start of the pandemic , and President Biden used student loan forgiveness as a key component of his presidential campaign .
After two years of the pandemic and one year of President Biden's term , student loan forgiveness is a hot topic now more than ever .
The future of student loan debt forgiveness is very much up in the air , and it's understandable if you're confused or have questions .
Can my loans be forgiven ? Can ALL of my loans be forgiven ? Is there certain eligibility ? Would I even be eligible ? When , if ever , is this going to happen ? All legitimate concerns .
The answers differ from person to person based on a number of factors , but here are some baseline facts to get you started .
What's going on with the student loan situation right now ? At the end of 2021 , President Biden extended the pause on student loan payments to May 1 , 2022 through the CARES Act , the first COVID relief bill that was passed during the Trump presidency in March 2020.
Former president Trump extended the payment pause twice , and President Biden has extended the pause three times .
After the second extension , the Biden Administration stressed that there wouldn't be another , but decided to allow one more in light of the raging Omicron variant .
The current student loan payment pause includes :
No federal student loan payments until May 1 , 2022 No interest accumulating on loan amounts No collections on loans that are in default
Will student loan forgiveness actually happen ? Many experts believe that total loan forgiveness is unlikely to happen , but we're still holding out hope for partial cancellations from the U.S. government .
There are also more than 30 pieces of proposed legislation currently in Congress related to student loan forgiveness .
Members of Congress are split over the amount of debt per borrower that should be canceled .
President Biden campaigned on forgiveness of $ 10,000 , and one piece of proposed legislation circulating through the House committees seeks to forgive $ 50,000 .
The dispute has effectively gridlocked the progress of student loan forgiveness legislation , but all is not lost .
Since the beginning of his term , President Biden has canceled nearly $ 12 billion in federal student loan debt , and more cancellations could come .
If President Biden cancels more debt or debt forgiveness legislation is actually passed , there are a few things to keep in mind :
President Biden's cancellations have limitations Of the $ 12 billion in student loan debt that President Biden has canceled , it has been reserved for certain groups of borrowers .
Teachers , those who are considered public servants , borrowers whose institutions have closed , borrowers who were misled by their nstitutions ( this is called borrower defense ) , and Americans with total and permanent disabilities have been cancellation beneficiaries .
There are a few more cancellation categories , so click the hyperlinks to see if you might qualify for any of them !
Only federal loans can be forgiven Not all student loans are created equal .
Borrowers can take out loans through the federal government or loans offered by private lenders . Federal loans are the only ones that can be canceled or paused by the government .
If loan forgiveness legislation passes , it will not affect the amount that borrowers owe to private lenders , so those payments would continue as normal .
Federal loan forgiveness could be based on income In addition to proposing cancellation of $ 10,000 in student loan debt for each borrower , President Biden also campaigned on a long - term payment solution that would reduce payments based on income .
Under his plan , your yearly repayment amount for undergraduate loans would be five percent of any income you earned over $ 25,000 .
For example , if your discretionary income ( after taxes , housing and food costs ) is $ 75,000 , you would only pay $ 2,500 in student loan repayment each year ( $ 50,000 x 5 % ) . If your discretionary income is below $ 25,000 , you wouldn't have to make payments at all .
What about loans with private lenders ? Even though loan forgiveness doesn't apply to loans taken out with private lenders , you still have options .
Some private lenders offer refinance options that could lower your interest rate or repayment assistance programs based on state , loan type and payment term .
Other borrowers have found solutions by going the legal route , and considering that private lenders are increasingly being sued for predatory practices , this approach could lead to welcome surprises .
Navient , a private lender for 12 million borrowers , recently settled a class action lawsuit alleging that they advised borrowers to put their loans into forbearance rather than offering income - determined repayment plans .
The lawsuit also claimed that Navient offered loans to borrowers who it knew would likely default . As part of the settlement , Navient is canceling debts totaling $ 1.7 billion for 66,000 borrowers and paying almost $ 260 to 350,000 borrowers .
If you have defaulted and charged off loans that were taken out with Sallie Mae between--- 2002 and 2010 , you could be contacted by Navient as an affected borrower from this lawsuit .
You wouldn't technically be a party to the lawsuit , but you could possibly still benefit from the settlement . Navient will be contacting affected borrowers after all the legal matters are finalized .
So , what should I do ? I am not a financial or student loan advisor , and you should always seek professional counsel before making major financial decisions .
However , since it seems like not much will change with the student loan forgiveness situation in the immediate future , a good plan might include being prepared to resume federal payments starting May 1 , 2022.
If loan forgiveness legislation is passed , the qualifications will ( hopefully ) be clear , and at that point , may the odds be in your favor . In the meantime , stay ready so you don't have to get ready , and check out these student loan debt resources :
National Consumer Law Center : The NCLC's Student Loan Borrower Assistance site is your one - stop loan information shop .
It has tools for everything from repayment to default concerns . If you need a starting point for loan repayment assistance , don't miss this one .
The Student Loan Doctor LLC : Sonia Lewis happily takes on the role of the student loan doctor , leading her team as the first Black and woman owed student loan repayment company in the U.S.
She has serviced more than 20,000 clients nationwide , including graduated borrowers and current college students who need assistance with student loan strategy .
Student Loan Show Podcast : Hosted by student loan attorney Jay Fleischman , this podcast covers a gamut of student debt topics .
There are six episodes , so very digestible and informative .
The host also offers a complimentary six - part email series covering collections , defaults , and repayment . Destroy Your Student Loan Debt by Anthony O'Neal :
A former Ramsey Personality , Anthony O'Neal is an author who has carved out space for himself as a student debt expert . Destroy Your Student Debt was published in 2020 , following his critically acclaimed 2019 book Debt Free Degree :
The Step - by Step Guide to Getting Your Kid Through College Without Student Loans .
The Total Money Makeover by Dave Ramsey : Financial expert Dave Ramsey published this book as an overall guide to eliminating personal debt . The book is intended to help readers develop better relationships with money by debunking " money myths " and completely transforming money habits.
