Federal borrowers remain unaware of relief programs that could lower monthly payments or eliminate debt entirely
Millions of Americans are paying more on their student loans than they need to, simply because they don’t know about federal programs designed to make their debt more manageable. Financial advisors and consumer advocates are sounding the alarm about a troubling knowledge gap that’s costing borrowers thousands of dollars.
K.C. Smith, a certified financial planner and managing associate at Henssler Financial in Kennesaw, Georgia, which ranked No. 46 on CNBC’s Financial Advisor 100 list for 2025, explained that many borrowers end up paying more than necessary simply because they aren’t aware of the full range of relief options available to them.
The problem is more widespread than many realize. A September survey by The Institute for College Access & Success, a nonprofit advocating for college affordability, revealed startling statistics about borrower awareness. The survey gathered responses from more than 1,000 self-identified federal student loan borrowers and uncovered significant gaps in knowledge about crucial programs.
Massive awareness problem threatens borrowers
Fifteen percent of federal student loan borrowers said they have heard nothing at all about the government’s income-based repayment plans, according to the survey findings. Nearly a quarter of borrowers, or 23%, said they didn’t know about the Public Service Loan Forgiveness program. Perhaps most concerning, 47% of borrowers were not aware of a program that cancels loans for certain disabled borrowers.
Michele Zampini, associate vice president of federal policy and advocacy at The Institute for College Access & Success, expressed concern about how many student loan borrowers remain in the dark about programs that can help them stay current and eliminate their debt sooner.
Enrolling in an income-based repayment plan that lowers monthly payments is often the only way a borrower can afford to stay out of default, according to Zampini. More than 5 million borrowers are currently in default, and that total could swell to roughly 10 million borrowers soon, the Trump administration said earlier this year.
Borrowers are struggling with a weakening labor market, as well as numerous changes to the student loan system and recent trouble accessing programs under the Trump administration, experts say.
Income-driven plans can drop payments to zero
Congress created the first income-driven repayment plans in the 1990s to make student loan borrowers’ bills more affordable. The plans cap monthly payments at a share of a borrower’s discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years. Under the plans, some people end up with a zero-dollar monthly payment.
Smith noted that 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.
The Biden administration’s Saving on a Valuable Education plan is now defunct after a court blocked the program. President Donald Trump’s legislation phases out some other income-driven repayment plans. However, borrowers will retain access to at least one plan, if not more.
The best option for many borrowers looking for another affordable repayment option now that SAVE is unavailable is the Income-Based Repayment plan, experts said. Under the terms of IBR, borrowers pay 10% of their discretionary income each month, though that share rises to 15% for certain borrowers with older loans.
Current borrowers will maintain access to IBR. But those who borrow after July 1, 2026, will be able to enroll in only one income-driven repayment plan, known as the Repayment Assistance Plan.
Under RAP, monthly payments will typically range from 1% to 10% of earnings. The more someone earns, the bigger the required payment. Bills can be as low as $10 a month on RAP. Borrowers can submit a request for an income-driven repayment plan at StudentAid.gov.
Forgiveness programs still available
Despite recent changes, the Education Department continues to offer a wide range of student loan forgiveness programs, including Public Service Loan Forgiveness and Teacher Loan Forgiveness.
PSLF allows certain not-for-profit and government employees to have their federal student loans cleared after 10 years of on-time payments. Under TLF, those who teach full-time for five consecutive academic years in a low-income school or educational service agency can be eligible for loan forgiveness of up to $17,500.
Borrowers may also be eligible for loan forgiveness if their school suddenly closed or they’re diagnosed with a serious disability, Smith noted. At Studentaid.gov, borrowers can search for more federal debt cancellation opportunities. Meanwhile, The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.
Disclaimer: This article is for informational purposes only and not financial advice. Always research before making investment decisions.
Source: CNBC