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Student Loan Forgiveness Updates: Top Questions Answered

If you feel like you’re drowning in student loans, you’re not alone. As of June 2024, Americans owed about $1.6 trillion in student loans—an alarming 42% more than they owed a decade earlier. This debt load has sparked many national conversations about how to provide relief, with numerous initiatives launched over the past two years, to varying degrees of success. If the fluctuating news about potential student loan forgiveness has given you whiplash, you are most definitely not alone. And buckle up because the roller-coaster ride is not over. This FAQ covers what we know today—with the caveat that it could be different tomorrow.

1. What Programs Are Available To Ease or Erase Student Debt?

While sweeping forgiveness proposals have hit legal and political roadblocks, several real options remain to help manage student debt. Here are the highlights of some programs.

Saving on a Valuable Education (SAVE) plan

This income-driven repayment (IDR) plan cuts the monthly payments from 10% to 5% of discretionary income, and moves the poverty line so more income is protected. A major win: 100% of unpaid interest is covered, so your balance won’t grow if your payments fall short. For borrowers with smaller original loan amounts ($12,000 or less), full forgiveness can come after just 10 years.

👉 What to do:

  • Check your eligibility: The SAVE plan began rolling out in 2023, but some features are currently paused due to ongoing court challenges.
  • Apply now: As of March 26, 2025, the online application is back up and running—borrowers can enroll or re-enroll at StudentAid.gov.
  • Check your status: If you were already enrolled, you may have been placed in administrative forbearance, meaning you don’t need to make payments, and your loan won’t accrue interest during this time.
  • Watch the clock: Months in forbearance do not count toward loan forgiveness, so this pause doesn’t move you closer to cancellation under IDR timelines.
  • Stay updated: Court rulings could impact how or when full SAVE benefits resume, so check your loan servicer’s site and Federal Student Aid updates regularly.

Public Service Loan Forgiveness (PSLF) program

The PSLF program forgives the remaining balance on Direct Loans for eligible public service workers—like teachers, first responders, military service members and nonprofit employees—after 120 qualifying monthly payments made while working full time for a qualifying employer. This program has helped hundreds of thousands of U.S. borrowers get their debt canceled.

The refreshed formula applied more payments to the requirement, including adding in the months of nonpayment during the pandemic pause. If you’ve made 120 qualifying payments under these updated rules, your remaining loan balance is eligible for forgiveness—automatically in some cases.

👉 What to do:

  • Use the PSLF Help Tool to confirm whether your employer qualifies and to generate your PSLF Form.
  • Check your loan type. Make sure it’s a Direct Loan.
  • Keep an eye out for updates. While President Trump has indicated he intends to scale back eligibility for this program, the Federal Student Aid office currently says, “We are reviewing the recent Executive Order regarding the Public Service Loan Forgiveness (PSLF) Program. There are no changes to PSLF currently, and borrowers do not need to take any action."

Employer-sponsored benefits

According to SHRM’s Benefits Survey, 9% of employers offer student loan repayment assistance. While still not widespread, the benefit is gaining visibility, with some high-profile companies adding the perk to attract and retain talent.

👉 What to do:

  • Ask HR whether your employer offers student loan repayment benefits.
  • If not, consider suggesting it as a employee benefit. Under current IRS rules, employers can contribute up to $5,250 tax-free toward your student loans, making it a win-win for employers and employees.

2. If My Student Loan Was Paused, When Was I Supposed To Resume My Student Loan Payments? What If I Didn’t?

You were expected to resume payments in October 2023. That’s when the COVID-era federal payment pause officially ended, with interest accumulation resuming on September 1, 2023.

To ease the transition, the Department of Education introduced an “on-ramp" period—lasting through September 30, 2024—during which time missed payments wouldn’t be considered delinquent, placed in default or be reported to credit bureaus or referred to debt collectors.

That grace period is over now. As of 2025, borrowers who haven’t resumed payments are seeing consequences. Reports indicate nearly 13% of loans are delinquent, and another 7% are in default or otherwise unresolved. Those delinquencies have already started to impact credit reports, making it more challenging to get loans or make other financial moves.

Furthermore, starting May 5, 2025, the Education Department reportedly began garnishing wages and federal benefits for those in arrears. If your loan is in default, you may receive a letter directing you to contact the Default Resolution Group, where you can find further instructions.

👉 What to do:

  • Check your status at StudentAid.gov. Log in with your Federal Student Aid ID, then go to the “My Aid" tab to view your loan details.
  • Use StudentAid.gov’s virtual assistant, Aidan. Click the owl icon to get help with resetting your password, logging in, identifying your loan servicer, checking your account balance and more.

3. What Happens If I Can’t Make My Payments?

First, don’t panic. You’ve got options. If your monthly payment feels unmanageable, consider applying for an income-driven repayment plan, which adjusts your payment based on income and family size. You can also explore loan consolidation, which might simplify multiple loans into one and potentially lower your monthly payment by extending the repayment period. But be aware: Consolidation can change your interest rate, extend your payoff timeline and result in the loss of certain borrower benefits. A lower payment today could mean paying more over time due to accruing interest.

👉 What to do:

  • Use the Loan Simulator at StudentAid.gov to compare the options.
  • Read the fine print before making changes—especially if you’re working toward forgiveness.

4. What Happens to My Student Loans If the Department of Education Is Dissolved?

Your loans would still exist—they’d likely just be managed by a different federal agency.

You may have seen the news that the Department of Education (DOE) is on the chopping block. While it can’t unilaterally be eliminated—Congressional approval is needed to close a federal agency—the threat has caused consternation, given that this department oversees the federal student loan program.

Rumors continue to swirl about what’s next—and a lawsuit has been filed—but one thing is certain: Dismantling the DOE doesn’t mean your loans will go away. They are debts owed to the federal government and would likely be transferred to another agency for administration.

👉 What to do:

  • Continue to make payments as scheduled.
  • If you’ve let your payments lapse, make a plan to attack your student loan debt. The longer you delay, the more damage it can do to your credit and long-term financial goals.
  • Stay informed. Log in to StudentAid.gov regularly to check your loan status.
  • Maintain personal records. Take screenshots of payment history and save confirmation emails.
  • Review your credit report to ensure there are no errors related to your loans, especially during times of system or policy change.

5. If My Loan Is in Forbearance, What Should I Do With the Funds I Would Otherwise Be Using To Make Payments?

Consider treating the money like you’re still making payments, even if you’re not required to right now.

If your loan is in forbearance—whether due to financial hardship, an administrative pause or personal choice—it’s tempting to redirect that extra cash toward daily spending. But instead of treating it like a windfall, consider setting aside the same amount each month as if your payments were still active. This approach helps you stay financially disciplined and gives you a buffer when payments restart. Even better, you can put that money to work in the meantime.

💡 Smart moves for that “extra" money:

  • Set it aside in a high yield savings account where it earns interest but stays accessible.
  • Build or boost your emergency fund—aim for three to six months of expenses.
  • Pay off high-interest debt, which often costs more than student loan interest.

6. If I Qualify for One of These Debt-Relief Options, What Should I Do With the Funds I Had Set Aside To Pay My Loans?

If your student debt has been reduced or eliminated, congrats—you’ve just opened up a little breathing room in your budget. This is a great opportunity to review your financial goals and put that freed-up cash to work.

💰 Here are smart ways to use that extra income:

  • Start (or restart) a new savings habit. Consider putting the same amount you were paying toward loans into a high yield savings account to build an emergency fund or cover short-term goals. And earn interest!
  • Explore a certificate of deposit (CD) for money you don’t need right away. CDs often offer better interest rates than traditional savings accounts. Just know that your cash will be locked up for a set term.
  • Invest for the long term. Opening or contributing to a traditional or Roth IRA can help grow your retirement savings over time, thanks to the magic of compound interest.
  • Refocus your financial goals. Any money milestone—especially one like student debt relief that allows you to “reset"—is an opportunity to assess your future goals and make moves to improve your overall financial well-being.

The Bottom Line

The student loan landscape is still shifting, and more changes are likely on the horizon. For now, stay in the loop—check your loan status, confirm whether you’re in repayment or forbearance, and explore whether a new repayment plan better fits your goals. And keep making your payments as required!

If the forgiveness you hoped for hasn’t materialized, you’re not alone—and yes, that can be stressful. But this is a good moment to revisit your budget, explore ways to free up cash flow, and create a realistic plan for handling your payments while still building your savings. Student debt may still be part of your financial picture, but with the right tools and some proactive steps, it doesn’t have to control the whole frame.

READ MORE: Which Savings Account is Best For Your Needs?

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Cathie Ericson

Cathie Ericson is an Oregon-based freelance writer who covers personal finance, real estate and education, among other topics. Her work has appeared in a wide range of publications and websites, including U.S. News & World Report, MSN, Business Insider, Yahoo Finance, MarketWatch, Fast Company, Realtor.com and more.

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*The information, opinions and recommendations expressed in the article are for informational purposes only. Information has been obtained from sources generally believed to be reliable. However, because of the possibility of human or mechanical error by our sources, or any other, Synchrony does not provide any warranty as to the accuracy, adequacy or completeness of any information for its intended purpose or any results obtained from the use of such information. The data presented in the article was current as of the time of writing. Please consult with your individual advisors with respect to any information presented.