Student loan forgiveness is a significant and newsworthy factor in higher education finance, offering relief to borrowers burdened by hefty debts. Income-Driven Repayment (IDR) plans and Public Service Loan Forgiveness (PSLF) have played a pivotal role in alleviating the financial strain on individuals pursuing education—but do these programs work? Keep reading to learn about the statistics behind student loan forgiveness and their impact on borrowers.

Income-Driven Repayment Plan Forgiveness
Income-Driven Repayment (IDR) is a federal student loan repayment program available to borrowers in the United States. When enrolled, your monthly payment amount is tied to, and dependent upon, your income and family size, making it more manageable for individuals who may have lower incomes or significant student loan debt relative to their income. In the IDR program, borrowers could have a portion of their student loans forgiven after making consistent payments. Here's a breakdown of IDR statistics as of December 2023:

• Debt forgiven: $45.7 billion
• Borrowers to receive forgiveness: 930,500
• Average forgiveness per borrower: $49,113

Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is a federal student loan program designed to forgive the remaining balance for borrowers who work full-time for a qualifying employer in the public sector, after 120 qualifying payments (typically 10 years of repayment). Here are some key PSLF statistics as of June 2023:

• Total debt forgiven: $56.7 billion.
• Number of borrowers to receive forgiveness: 793,400.
• Average amount of forgiveness per borrower: $71,465.
• Total PSLF applicants (including applications that haven’t yet been processed): 6,147,812

It’s important to follow application instructions carefully and ensure your qualifications for these programs are accurate and up to date. Many PSLF applications are rejected due to lack of proper documentation. It can be immensely helpful to find a trusted source or student loan advisor who can help you navigate the PSLF (and IDR) process.

Important Changes to IDR

Saving on a Valuable Education (SAVE) is the newest IDR plan and – for the majority of federal borrowers – the IDR plan that makes the most financial sense. In addition to tying your monthly payment to your income and family size, it drastically reduces payments for most individuals compared to other repayment plans. This is because this plan calculates payments using a smaller portion of your adjusted gross income (AGI), requires a smaller percentage of the result, and offers an interest benefit— if your full monthly payment doesn't cover the accrued monthly interest, the government covers the remaining interest, preventing your balance from increasing due to unpaid interest.

Further enhancements to the SAVE plan are set to roll out in the summer of 2024, further decreasing monthly payments for borrowers with undergraduate loans or a combination of undergraduate and graduate loans.

Forgiveness Within Reach

The significance of federal repayment and forgiveness plans can be seen in the news, as the government continues to revamp and improve upon the programs available, aiming to help more borrowers, relieve more debt, and increase the number of borrowers who can earn student loan forgiveness. In the meantime, IDR and PSLF are vital tools in ensuring equitable access to higher education and the management of student loan debt. By delving into forgiveness data, policymakers, educators, and borrowers can better understand the effectiveness of these programs, paving the way for informed decisions aimed at enhancing the accessibility and affordability of higher education for all.

Resources:
https://www.nerdwallet.com/article/loans/student-loans/student-loan-debt#average-student-loan-debt (And sources used within)
https://studentaid.gov/announcements-events/save-plan
https://www.consumerfinance.gov/ask-cfpb/what-is-income-based-repayment-ibr-en-633/
https://www.consumerfinance.gov/ask-cfpb/what-is-pay-as-you-earn-paye-how-do-i-know-if-i-qualify-en-1555/
https://studentaid.gov/help-center/answers/article/icr-plan?mod=article_inline