What To Do If Student Loan Forgiveness Isn’t In Next Stimulus Bill

President Donald J. Trump (Photo by Ira L. Black/Corbis via Getty Images)

Corbis via Getty Images

There’s a good chance the next stimulus bill will not include any student loan forgiveness.

Here’s what you need to know — and what to do instead.

Student Loans

There is much anticipation about the next stimulus bill. Will you get student loan forgiveness? Will there be a second stimulus check? Will unemployment benefits get extended? Senate Majority Leader Mitch McConnell (R-KY) has said the next stimulus bill will be the final one and it will be closer to $1 trillion (which is half the size of the CARES Act). For student loan borrowers, the most likely scenario is that you won’t get student loan forgiveness in the next stimulus bill. Why? Senate Republicans have not prioritized student loan forgiveness, and instead are focused on other initiatives to stimulate the economy such as a return-to-work bonus, a payroll tax cut and limitation of liability for COVID-related lawsuits. So, if there’s no student loan forgiveness, what can you do to pay off student loans?

Here are 5 things you can do right now:

1. Pay off your student loans faster

Yes, pay off student loans faster. That may not be so easy given the state of the economy, the high unemployment rate and lots of uncertainty. However, tough times call for tough measures. The best thing you can do to manage your student loans is to tackle them head on based on your personal financial situation. What’s the best way to pay off student loans faster? The best place to start is with these options. The good news is that all these options have no fees:

Do This: Choose the right path for you. Start right now.

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2. Keep pausing your student loan payments

If you want to forget about your student loans and focus on other aspects of your financial life, then you have that luxury through September 30, 2020. Until that date, you are not required to make any federal student loan payments and your interest rate on your federal student loans is 0%. While your federal student loan balance will not grow, you also won’t receive any student loan forgiveness. After September 30, it’s back to normal. Your interest rate will be back and you’ll owe monthly payments again.

Do This: If you choose this strategy, your payment pause is automatic. However, please have a game plan in place for when student loan payments resume. The sooner, the better.

3. Get a lower payment

Want to get a lower student loan payment? Update your income if you have an income-driven repayment plan. If you lost your job, had your hours reduced, got furloughed or had your salary cut, let your student loan servicer know. You can recertify your income, which could get you a lower student loan payment. Income-driven repayment plans are for federal student loans only, and are based on your discretionary income, family size and state of residency. There are four types of income-driven repayment plans:

Income-Based Repayment (IBR)
Pay As You Earn (PAYE)
Revised Pay As You Earn (REPAYE)
Income-Contingent Repayment (ICR)

Do This: Contact your student loan servicer to recertify your income and find out if you qualify for a lower monthly payment. You can also change your income-driven repayment plan.

4. Find other ways to get student loan forgiveness

If they won’t give student loan forgiveness to you, then you need to go get student loan forgiveness. Why? Don’t expect student loan forgiveness in the next stimulus bill. House Democrats included student loan forgiveness in the Heroes Act, a $3 trillion stimulus bill that passed the House of Representatives. However, the final bill limited who is eligible for student loan forgiveness, and it’s unlikely to pass the Senate. If you want student loan forgiveness, the Public Service Loan Forgiveness program can help you get student loan forgiveness for your federal student loans. While 98.5% of applicants have been rejected, 2,215 borrowers collectively have received $146 million in federal student loan forgiveness.

Do This: Consider a job in public service or a non-profit. The job market is tight, but you can start your job search now to find the right opportunity.