Education

Student loan forgiveness is still up in the air—here’s how to manage and prepare for student debt

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With the federal pause on student loan payments due to expire on the last day of this month, the Biden administration is weighing their options on student loan forgiveness. Payments on federal student loans have been on hold, with a zero percent interest rate, since the beginning of the COVID-19 pandemic in early 2020.

Biden is expected to extend the pause on student loan payments, and is also considering measures to cancel at least $10,000 of debt for borrowers. This would add to the $25 billion in student loans his administration has already canceled for certain borrowers like those in public service and people with permanent disabilities. 

While the status of student loan forgiveness remains uncertain, it’s a good idea to review your student loan debt and learn strategies for managing and consolidating what you owe. Prospective students should educate themselves on ways to pay for school and how to manage student loans before they apply. 

Managing your current student debt

Whether or not your payments are paused right now, it’s a good time to take stock of your loans and review how much you owe to whom. For federal loans, you can check the National Student Loan Data System to get a list of your loans, how much you owe, and the monthly payments.

If you have several loans, it might be a good idea to refinance your student debt in order to consolidate your loans into one monthly payment. This can lower the interest you end up paying over time. Keep in mind, however, that if you refinance federal loans with a private servicer, you may lose some benefits such as eligibility for forgiveness programs.

If you are experiencing financial hardship, you can ask your loan servicer for a deferment or an income-based repayment plan that may lower your monthly payment. There are also some options for student loan forgiveness or assistance depending on your circumstances. 

Preparing for student debt

A recent survey by ParentsTogether revealed just how much anxiety families are feeling about the cost of college. An overwhelming 87 percent of respondents said they worry about their children’s financial ability to get higher education. Folks preparing to start college should learn as much as possible about their financing options before making any commitments. 

Your first step to obtaining financing for school is filling out the Free Application for Federal Student Aid (FAFSA). This application will determine which types of loans you’re eligible for, and how much money you qualify for. 

Before taking out any loans, explore the options provided directly by the school you plan to attend. You can also check with the U.S. Department of Education to find out about state loans that might be available to you. 

Different types of loans have different interest rates, so you’ll want to apply for loans with the lowest possible interest rates to lower the total amount you’ll have to pay over time. In order from the best option to the most expensive option, the general types of student loans are:

  • Financial aid:  Your college may offer you a financial aid package financed through a combination of federal direct loans, state agencies, and the school itself. These loans tend to have the lowest interest rates.
  • Federal (PLUS) Loans:  Graduate students and parents of dependent undergraduates can apply for these loans to cover the amount of tuition not covered by financial aid. Federal (PLUS) loans tend to have slightly higher interest rates than those offered in federal direct loans.
  • Private loans:  Private loans should be treated as a last resort since they have the highest interest rates of all the options. These loans are usually offered by banks, financial institutions, and some private organizations and foundations.

As more families are being burdened with student loan debt than ever, and financing college becomes an increasingly challenging reality for prospective students, many American families are seeking relief from their student loan debt. Families across the country will wait in anticipation for Biden’s announcement on student loan forgiveness later this month. 


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Mckenna Saady is a staff writer and digital content lead for ParentsTogether. Before working for nonprofits such as the Human Rights Campaign and United Way, Mckenna spent nearly a decade as a child care provider and Pre-K teacher. Originally from Richmond, VA, she now lives in Philadelphia and writes poetry, fiction, and children’s literature in her spare time.