The numbers on student loan debt in the US are staggering. The outstanding federal student loan balance is documented at $1.602 trillion, which accounts for close to 93% of all student loan debt. For eligible borrowers, student loan forgiveness is a worthwhile goal, but the process to get there can seem complicated or confusing. Fortunately, there are tools to help borrowers access everything they need during their student loan forgiveness journey.
Combating the challenges of federal forgiveness programs
Some of the most popular programs to pursue federal loan forgiveness include Public Service Loan Forgiveness (PSLF)and Income-Driven Repayment (IDR). PSLF is exclusively available to nonprofit and public sector employees, while IDR plans are accessible to borrowers working in the private sector as well. The concept is relatively simple: through qualifying work or income situations, borrowers can enroll in a manageable payment plan that leads to forgiveness of the remaining balance after a set period of qualifying repayment. However, these programs have proven to be notoriously complex and hard to navigate for many borrowers. The PSLF program has even reported a rejection rate as high as 96.7% as of June 2023, according to the office of Federal Student Aid. Reports show that at least 3.72 million indebted student loan borrowers qualify for PSLF based on their employment status, but many are unaware of their eligibility.
Student loan forgiveness counseling
Having a student loan debt expert on your side is an incomparable tool when it comes to navigating the tricky waters of federal student loan forgiveness. Laurel Road’s new Student Loan Freedom program includes forgiveness counseling services to help members through the application or enrollment process and help them manage complex program requirements year after year.
Student Loan Freedom is a one-stop shop to manage your student loan options. If you have federal loans or a mix of federal and private student loans, our student loan experts can help you consider each of your options, including repayment plans, forgiveness programs, and private refinancing, if that is right for you. Through personalized counseling, you’ll learn about the following programs:
PSLF
IDR
If you qualify for PSLF or are already enrolled, you’ll be guided from top to bottom to understand your eligibility, apply, and track your progress toward forgiveness year after year. Our audit will include a review of eligible/qualifying payments and we’ll help manage employer and program requirements (even as they may change from year to year). In the event that any discrepancies arise, our team can help manage your appeal case with the Department of Education (ED).
If IDR is right for you, experts will help you with end-to-end application guidance, a deep dive into your student loan payment history to confirm your eligible payment count, and guidance for monthly and annual savings strategies. As always, our team can also help you liaise with ED over any discrepancies.
Student loan refinancing
Even if you don’t qualify for federal forgiveness programs, you can still get on a path to Student Loan Freedom. If refinancing with a private lender is the right solution, a student loan consultation will help you compare easy refi options that could help you save on your loans, possibly through a lower rate or shorter term.
The Federal Student Aid website
The official Federal Student Aid website is a comprehensive resource for managing all aspects of your federal student loans. It offers detailed information on loan balances, helping you keep track of what you owe. The site provides extensive resources on various repayment plan options, allowing you to choose the plan that best fits your financial situation. Additionally, it outlines eligibility criteria for forgiveness programs such as PSLF and IDR, and will keep any announced changes, reforms, or program pauses up to date with the most recent information. The website also features a step-by-step guide on how to apply for repayment and forgiveness programs, making the process straightforward and accessible.
Budgeting strategies for student loans
Budgeting for student loans requires careful planning and effective management of expenses and payments. Incorporating your repayment plan into your regular budget is essential for reducing the stress associated with an extra monthly bill. Once you have a plan in place, you’ll have that weight lifted.
50/30/20 budget
If you need to tighten your belt, creating a budget that includes loan repayments as a priority is crucial. One helpful approach is the 50/30/20 rule, which allocates 50% of your income to needs, 30% to wants, and 20% to savings and debt repayment.
Your 50/30/20 Budget
Add your monthly income on the left to calculate.
Needs
$0
Essential required expenses – including housing, utilities, and minimum debt payments.
Wants
$0
May include expenses you don’t always need, such as restaurants, travel, or entertainment.
Savings
$0
Should include emergency funds, retirement, and extra debt payments.
Needs
$0
Essential required expenses – including housing, utilities, and minimum debt payments.
Wants
$0
May include expenses you don’t always need, such as restaurants, travel, or entertainment.
Savings
$0
Should include emergency funds, retirement, and extra debt payments.
Financial planning
Creating space in your lifestyle for student loan payments is key, and a financial advisor can be invaluable in this process. In addition to advising on repayment and offering annual evaluations to help you adjust your budget based on changing circumstances, they can help you understand and prepare for the potential tax implications associated with loan forgiveness programs.
Whether or not your forgiven balance is taxable can depend on many factors, including the forgiveness program, state of residence, amount forgiven, income, filing status, and other variables. Setting aside savings can alleviate financial surprises. With a solid plan in place, you can manage your student loans more confidently and focus on other financial priorities.
Student loan freedom is closer than you think
Leveraging these tools can maximize your chances of qualifying for student loan forgiveness while reducing payment stress. With a solid plan and expert guidance, you can navigate your student loan journey more confidently. Freedom from student loan stress starts with a free consultation – for more details on the perks of membership, visit Student Loan Freedom.
Sources:
- https://educationdata.org/student-loan-debt-statistics
