Student loan borrowers unaware of income-based plans, forgiveness options

with many people federal student loan borrowers Consumer advocates and financial advisors struggling to pay off their debt say it’s crucial for consumers to know about the U.S. Department of Education’s affordable rates repayment plans and donation programs.

Unfortunately, some don’t do this.

“Many borrowers overpay because they are not aware of all the relief options available to them,” said certified financial planner KC Smith, managing partner of Henssler Financial in Kennesaw, Georgia, ranked No. 46 on CNBC’s 2025 Financial Advisor 100 list.

In fact, 15 percent of federal student loan borrowers said they had heard “nothing” about the government’s income-based repayment plans. a new survey By the Institute for College Access and Success, a nonprofit organization that advocates for college affordability. Almost a quarter, or 23%, of borrowers said they were unaware of the Public Service Loan Forgiveness program, and 47% said they were not aware of it. program This cancels loans for certain disabled borrowers.

The survey, conducted in September, is based on responses from more than 1,000 people who self-identified as having federal student loans.

It has to do with how many student loan borrowers are left in the dark about programs that can help them stay current and eliminate debt more quickly, said Michele Zampini, vice president for federal policy and advocacy at the Institute for College Access and Success (TICAS).

“Enrolling in an income-driven repayment plan that lowers their monthly payments is often a borrower’s only way to avoid default,” Zampini said.

Many borrowers would likely benefit from this option, which could reduce payments to as low as $0. It is stated that more than 5 million borrowers are currently in default and this total may soon rise to approximately 10 million borrowers. The Trump administration said: earlier this year.

Experts say borrowers are reeling from a weakening labor market, as well as changes to the student loan system and, more recently, problems accessing programs under the Trump administration.

However, basic recovery options are available. Here’s what borrowers need to know about them.

Congress created the first income-driven repayment plans, or IDRs. 1990s Making bills more affordable for student loan borrowers. The plans cap monthly payments at a share of the borrower’s discretionary income and cancel any remaining debt after a specified period of time (usually 20 years or 25 years). According to plans, some people zero dollar monthly payment.

“For those with federal student loans, evaluating whether they qualify for an income-driven repayment plan can be an important way to improve cash flow,” Smith said.

The Biden administration’s Savings on Valuable Education (SAVINGS) plan is now obsolete after the program was blocked by a court. And President Donald Trump’s “big beautiful bill” phases out some other IDR plans. But borrowers will have access to at least one plan, if not more.

Since SAVINGS are no longer possible, the best option for many borrowers looking for another affordable repayment option is Income Based Reimbursement Plan or IBR, experts said. Under IBR terms, borrowers pay 10% of their discretionary income each month; but that rate rises to 15% for some borrowers with older loans.

Existing borrowers will continue to have access to IBR. But after July 1, 2026, borrowers will only be able to enroll in a single IDR plan, known as a Repayment Assistance Plan, or RAP.

Monthly payments under RAP will typically range from 1% to 10% of your earnings. The more you earn, the larger your required payout. At RAP, bills can be as low as $10 a month.

You can request an IDR plan at: StudentAid.gov.

Despite recent changes, the Department of Education continues to offer a wide variety of student loan forgiveness programs, including: Public Service Loan Amnesty And Teacher Loan Forgiveness.

PSLF allows some nonprofits and government employees to pay off federal student loans after 10 years of on-time payments.

Under the TLF, those who teach full-time at a low-income school or educational service institution for five consecutive academic years may be eligible for loan forgiveness of up to $17,500.

Borrowers can also benefit from loan forgiveness; school closed suddenly or being diagnosed a serious injurysaid Smith.

On: studentaid.govborrowers may seek more federal debt cancellation opportunities. Meanwhile, the Institute of Student Loan Advisers a database List of student loan forgiveness programs by state.

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