President Joe Biden’s student loan forgiveness plan seemed like a dream come true for millions of borrowers when it was unveiled in August of 2022. Now they face the nightmare possibility that the money they counted on saving might have to be repaid after all.
A lawsuit filed by six Republican-leaning states challenging the legality of the debt relief program, as well as a second suit filed by two plantiffs backed by the Job Creators Network Foundation, are being heard by the Supreme Court. Arguments began on Feb. 28.
No matter what happens, the United States will still be home to a massive amount of student loan debt. During the 2022 third quarter, student loan balances stood at $1.57 trillion, according to a Nov. 15 press release from the Federal Reserve Bank of New York.
If the Biden administration’s debt relief program ends up being blocked permanently, federal student loan borrowers will have to start repaying their loans, likely sometime after June 30, 2023.
The amount of student loan debt in the U.S. — combined with the number of borrowers at risk of default — will likely renew conversations about the role employers can take in helping their workers reduce debt. That might be the best long-term solution, according to Kristen Carlisle, general manager of Betterment at Work, a provider of 401k and financial wellness benefits.
“Amidst all this uncertainty, one thing is clear: all student debt will not be going away anytime soon and it’s time for employers to take action,” Carlisle told GOBankingRates in an email statement. “The trillions of dollars of student loan debt owed in the U.S. is a nationwide crisis, and an enormous burden to the millions of Americans carrying that debt…Employers need to partner with employees to help find solutions.”
A number of high-profile companies have programs in place to help employees pay down student debt. Many government agencies do as well through loan repayment assistance programs, or LRAPs. These are provided to federal and state government employees and members of the U.S. Armed Forces as a recruitment and retention tool, according to the OPM.gov website.
Annual LRAP payments are capped at $10,000 and cumulative payments are capped at $60,000, though some federal agencies have lower limits, according to the Cappex website. Employees must agree to either keep working for the agency for at least three years or repay the full loan amount.
The Ask the Money Coach website lists more than 80 agencies that help out with college loans through LRAPs, ranging from large federal agencies such as the Departments of Agriculture, Commerce, Defense, Education and Energy to smaller independent agencies like the Federal Deposit Insurance Corporation, Federal Elections Commission, Federal Energy Regulatory Commission, the Federal Housing Finance Agency, the Small Business Administration and the Smithsonian Institution.
Federal employees might also qualify to have their loans forgiven through the Public Service Loan Forgiveness Program. Under this program, you can earn forgiveness of the entire remaining balance of your Direct Loans after you’ve made 120 qualifying payments or 10 years’ worth.
To learn more about getting help with student loans as a government employee, visit the Office of Personnel Management (OPM) website.
Here is a sample of how four federal agencies provide student loan repayment benefits:
- Department of Justice LRAP: Eligible attorneys can get $6,000 per year in repayment assistance with a lifetime maximum of $60,000, according to Best Colleges. Participating lawyers must sign an agreement with DOJ and commit to an initial three-year service obligation.
- Indian Health Service Loan Repayment: Eligible healthcare practitioners can receive up to $20,000 per year in student loan repayment assistance in exchange for a two-year service commitment to practice full-time in a designated Indian health program site.
- National Health Service Corps (NHSC) Rural Community Loan Repayment Program: Physicians, nurse practitioners, pharmacists and other healthcare professionals can earn up to $100,000 in student loan repayment assistance in exchange for a three-year service commitment at an NHSC-approved site.
- Department of State: According to the State.gov website, its Student Loan Repayment Program (SLRP) enables employees to reduce student loan debt incurred to support courses of study already completed by the employee or, in the case of Parent Plus loans, completed by the child of the employee. Payments are made directly to an employee’s lender or loan servicing organization.
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