US Student Loan Borrowers Can Save Money by Exploring Federal Repayment Options

How US student loan borrowers can save money by exploring federal repayment options. (Representative Image)A significant number of US student loan borrowers are paying more than necessary, often because they are unaware of the relief programs available to them, financial advisors say in conversation with the CNBC.Many of these borrowers could substantially reduce monthly payments or even have portions of their debt cancelled by enrolling in government-backed repayment or forgiveness plans.Federal programs such as income-driven repayment plans and Public Service Loan Forgiveness (PSLF) continue to offer relief to borrowers struggling with monthly payments. Yet a recent survey by The Institute for College Access & Success (TICAS) reveals that awareness of these programs remains limited.IPL Auction 2026IPL Auction 2026: Full list of sold and unsold players for all teamsIPL 2026 team and squad List: Updated players for all 10 Teams; who got whomMany borrowers unaware of income-driven repayment and forgiveness options“Many borrowers end up paying more than necessary simply because they aren’t aware of the full range of relief options available to them,” K.C. Smith, a certified financial planner and managing associate at Henssler Financial in Kennesaw, Georgia, said in conversation with the CNBC. Henssler Financial was ranked No. 46 on CNBC’s Financial Advisor 100 list for 2025.According to the TICAS survey, 15% of federal student loan borrowers said they have heard “nothing at all” about income-based repayment plans.by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeNita Ambani unveils an innovative treehouse at Nita Mukesh...Height gap draws attention: 5'2 Meloni’s reaction greeting 6'8 Mozambique President goes viral - watchThe Times of IndiaNearly a quarter, or 23%, did not know about the PSLF program, and 47% were unaware of programs that cancel loans for borrowers with disabilities.Awareness of federalstudent loan reliefprograms among borrowersProgram type% of borrowers unawareIncome-driven repayment plans (IDR)15%Public Service Loan Forgiveness (PSLF)23%Disability-based cancellation47%Michele Zampini, associate vice president of federal policy and advocacy at TICAS, told the CNBC that “enrolling in an income-based repayment plan that lowers their monthly payment is often the only way a borrower can afford to stay out of default.”Income-driven repayment plans can reduce monthly payments to zeroIncome-driven repayment plans, or IDRs, cap monthly payments at a portion of a borrower’s discretionary income and forgive remaining balances after 20 to 25 years.Some borrowers may qualify for monthly payments as low as $0, depending on their financial situation.“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 to the CNBC.The Biden administration’s Saving on a Valuable Education (SAVE) plan was blocked by a court, and some IDR plans have been phased out under former President Donald Trump’s “big beautiful bill.”However, borrowers still have access to at least one plan, and many may benefit from the Income-Based Repayment plan (IBR), which requires 10% of discretionary income monthly for newer loans. Older loans may see a rate of 15%.Typical monthly payments under current repayment optionsPlan typeMonthly payment rangeNotesIBR10–15% of discretionary incomeDepending on loan ageRAP$10–10% of earningsFor loans borrowed after July 1, 2026IDR$0–variableBased on income and family sizeBorrowers can request to enrol in an IDR plan through StudentAid.gov.Student loan forgiveness programs still availableDespite changes in recent years, the US Department of Education continues to offer a variety of student loan forgiveness programs.These include PSLF and Teacher Loan Forgiveness (TLF).PSLF allows eligible government and not-for-profit employees to have federal loans cleared after 10 years of consistent payments. TLF offers up to $17,500 in loan forgiveness for full-time teachers who work for five consecutive academic years in qualifying low-income schools or educational agencies.Borrowers may also qualify for loan cancellation if their school closes unexpectedly or they experience a serious disability, Smith explained in conversation with the CNBC.Additional relief options can be explored at Studentaid.gov or through The Institute of Student Loan Advisors, which maintains a state-by-state database of forgiveness programs.Summary of federal student loan forgiveness programsProgramEligibility criteriaForgiveness detailsPSLFGovernment/not-for-profit employeesLoans forgiven after 10 years of qualifying paymentsTLFFull-time teachers in low-income schoolsUp to $17,500 forgiven after five consecutive academic yearsDisability-based forgivenessBorrowers with severe disabilitiesFull loan cancellationMillions of borrowers at risk of default without reliefMore than 5 million US borrowers are currently in default on federal student loans, a figure projected to rise to nearly 10 million under the Trump administration, according to Zampini in conversation with the CNBC. Borrowers face added challenges from labour market instability and administrative changes affecting access to relief programs.Understanding and enrolling in available repayment and forgiveness programs can make a critical difference in borrowers’ financial health. Federal options allow eligible borrowers to lower payments, avoid default, and in some cases, eliminate debt entirely.Ready to navigate global policies? Secure your overseas future. Get expert guidance now!