How To Apply For Student Loan Forgiveness (Because The Toll Of Student Debt Is Very Real)

On Wednesday, President Biden announced he’d cancel $10,000 in student loan debt for Americans who earned less than $125,000 per year. He also said he’d be extending a pause on payments for every borrower until Dec. 31 of this year, and that some repayment plans could be revised, according to The White House’s release. 

Additionally, Pell Grant recipients will be eligible for an extra $10,000 of debt forgiveness, Biden announced, with the idea that this will give additional aid to lower-income folks. 

The move was long-anticipated and comes in a contentious political climate. More liberal people wanted more debt forgiveness and a decision sooner, while some on the right consider this a “handout” and say it isn’t fair to folks who’ve paid off loans already. And many on all sides are worried about how the move may impact inflation. The decision is expected to face legal challenges, which could cause delays in relief.

This forgiveness is expected to help people and have a significant impact, but some will still be “left hanging,” says Bryce McKibben, senior director of policy and advocacy at the Hope Center For College, Community, and Justice at Temple University. “More than 40 percent of the 43 million federal student loan borrowers will see their debt wiped out entirely,” he says. “This will be very meaningful to them, but for folks who have much more than that, they will still struggle with their remaining debt. The average borrower has $37,000 in debt.” Borrowers in this boat will need to take advantage of the new income-driven re-payment plan, which will essentially base their monthly loan payment on their income and family size. But for the short term, for those with more debt than this forgiveness move will pay for — and for some other groups, like those with only private loans, those who’ve refinanced their federal loans into private ones, or those who didn't go to college — the news either won’t help them or will come up short. (Federal student loans are funded directly by, you guessed it, the federal government, while private student loans, or alternative loans, get funded by private lenders, such as online lenders, credit unions, or banks.)

McKibben adds that the $125,000 wage cap may be problematic (again, to get the $10,000, people must earn less than $125,000 a year or live in a household making less than $250,000). This cap is officially called a “means test,” and may lead to even more people falling through the cracks. “The more eligibility requirements you put on a program, the more complex it is for the people who need the most help,” he says. Essentially, if people have to proactively tell the government that they make less than $125,000, well, some people just won’t. “This will dramatically increase the risk of people who need it the most not getting this help,” McKibben says. “Think of all the people who don’t have reliable internet access — there are people in poverty, people who are experiencing homelessness, there are lots of people who will have a challenge going online.” 

The issue of loan payments is nuanced, but what isn’t complicated is that loans impact literally millions of people’s lives — 43 million, to be exact, according to the Education Data Initiative.

We asked five people about how their private and federal student loans impacted them, and what they wish they had known about the loans before they took them out.

From the very beginning, Nadia Valentine didn’t like dealing with her student loans. She let her mom and older sister — the latter of which was the first person in her family to go to college — handle most of the logistics. “I come from a pretty low-income family,” she says. “My mom was a single mom. She's also a disabled veteran, so we were living off of her government benefits. When I got into Drake University, I got a decent amount of scholarships, but I still needed other financial aid.” Valentine ended up taking out about $16,000 in high-interest loans from Sallie Mae, as well as some federal loans. “I remember signing a few things and then trying to push it to the back of my mind for as long as possible,” Valentine says. 

She majored in broadcast news, and graduated in 2017 with a job at a morning radio show, but her starting salary was so low that it was difficult to make ends meet. She got a second job for a while and eventually started doing commercials and voice-over work to help make ends meet. She even entered a contest the beer company Natural Light advertised to get them paid off. “I made a pretty creative video for Natty Light about how I’d celebrate getting the loans paid off, and I’m still lowkey pissy I didn’t win,” she laughs now. 

After graduating, the lenders were coming to call, and interest had been accumulating the entire time she was in school. She paid (and still pays) $322 a month, more than her car payment. “It was hanging over my head,” she says. 

In 2018 and 2019, her mom got sick, and she had to take a leave of absence at work to be with her. During that time, she was able to defer her loans, but the interest was still piling up. In 2020, she was laid off, and eventually got a job at a legal office as a secretary. “I was at the point where I was going to have to do a job that I didn’t really care about. It wasn’t where I saw myself being at that point in my life. But I accepted the job.” 

With her debt piling up and journalism jobs looking bleaker and bleaker, she decided to take the LSAT, in part because she needed a better-paying job if she had any hopes of paying the loans off in the future.

“It came from a place of like, this is a last resort — which sounds bad, because I'm obviously going to law school because I care about people and I want to make a difference and I want to be part of the solution,” she says. “But it all also stems from that place of knowing: You gotta hustle. You got to do your work. And you've got to make money, because your other option is to not have any. I grew up without having any and now I want it. And I have no choice, really, with the loans.”

Meanwhile, the loans have also taken a toll on her personal life. “You feel bad for even having a little bit of fun, like if you go out to dinner with your friends,” she says. She also recently got married and had to have a long conversation with her partner about her debt before doing so. She’s also talked to folks who have pretty rigid attitudes about loans. 

“I can understand where people come from when they say, ‘You took them out, you’ve got to pay them back,’” Valentine says. “But we do that because we’re backed into a corner. For me, I didn’t want to stay in my hometown and work at Hardee’s or at a plant. I wanted to grow as a person and to have the best opportunities. I needed to go to school to do that — we don’t take out these loans to live these frivolous lives” 

To date, Valentine owes Sallie Mae about $22,000 but she only took out $16,000 in loans originally. If she pays it off in the 12 years she estimates it will take, she’ll have paid over $30,000. Her fixed interest rate on that loan is 12%. She also has one smaller loan with them that was $2,000 originally, with a variable interest rate of 9.8%, and she currently owes $1,500 on that (she plans to pay it off this year). 

Beyond that, to date, Valentine had $37,358 in federal loans, and was a Pell Grant recipient, meaning she’ll have $20,000 of her federal loans canceled. Thanks to today’s announcement, she says she’ll now owe about $17,000. She discovered this hours after the forgiveness news broke, after being in the library at her law school all day during her first week of classes. “It feels surreal,” she told Refinery29 shortly after hearing about the news. “It feels like I’m getting so many steps closer to living with less financial stress.”  

Even when she thought she’d only get $10,000 in forgiveness, ahead of the Biden announcement, she thought that would be a significant help, and said she was grateful for any forgiveness at all. “It takes something off our plate, even if it’s only a small amount,” she said ahead of the decision. “Our plates are already so full right now, and so anything that will give us more breathing room is a good thing.” 

Growing up, Yami thought that, in order to be successful, “you either could become a doctor, a lawyer, or maybe an architect.” So, after undergrad, she decided to apply for law school. Raised by a single mother who was going through cancer treatments that took her out of work at the time, Yami couldn’t afford to go without taking out both private and federal loans. “I figured, I’d become an attorney, get a nice-paying job, and help out my mom,” she explains. “There wasn’t too much hesitation and I never thought it was a gamble. Everything was going to be hunky dory.”

But after graduating, Yami couldn’t pass the bar exam, which she needed to do to practice law. She tried four times. “For whatever reason, mentally, it wasn’t clicking for me,” Yami reflects. Around this time, her mother also passed away. Eventually, she started working for the Florida court system. The government salary wasn’t enough to cover all of her expenses and loan payments, especially when the recession hit. She tried negotiating with her lenders and deferring her loans several times to make ends meet. Eventually, she just stopped paying. 

That’s when the private lenders took action. Because she had stopped paying, they sued her and were able to garnish her wages, taking money right out of her paychecks before it landed in her bank account. When she quit her full-time job to do contract work, they started directly garnishing her bank account.

Eventually, the private creditors, through legal action, were going to have the right to take possession of her property. “They were going to come to my home and take whatever I owned and try to sell it at auction.” To avoid that, she ended up filing for bankruptcy in 2015. This put the student debt collections on hold, but didn’t make the balance go away and would only keep creditors at bay for so long. She got her bankruptcy discharge in 2020, and realized they could soon come for her again. She was also pregnant with twins.

This time, she had to do something. She ended up refinancing and wrapping her private loans up in her mortgage. She also consolidated her federal loans. As of October 2020, she owed about $155,000 with an interest rate of 3.6%.

She’s glad she consolidated to get at least the private lenders who were coming after her off her back, even though it led to more, different debt. “​​I had to take those measures, but I don't regret it because it was my only option,” she says. “I don't have a sugar daddy, I’m a single mom, I don't have extra income coming in from anywhere. I'm just the sole provider and trying to maintain everything. That would have been one additional headache and this was pressure that I was able to alleviate.” 

This summer, Yami says she hasn't thought too much about what Biden would do with the federal loans — she didn’t think it would help her much, but even a little would be something. “I do hope I qualify, every bit counts,” she says. 

Yami says that debt has completely changed her life. “I’ve never been able to say, Oh, I'd like to take a trip, or spend on leisure,” she says. “I’ve been stuck in a situation where I can only spend the money that I have on necessities, such as my bills. My budget is tight — super tight. Now, with inflation and with my two toddlers, my expenditures are huge. The value of my money has lessened a lot. The loans I have left feel even more impossible.” 

Thalia Anguiano says no one ever fully explained to her what a nightmare her loans could be before she went off to school. “I come from a lower-income household — I’m a first-generation college student,” Anguiano says. “Growing up, my mom's always said, ‘You have to go to college.’ But money was just never really something that we chatted about.” 

Anguiano ended up applying for scholarships and filling out the Free Application for Federal Student Aid (FAFSA). “As a 17- or 18-year-old, I'm like, I don't know anything about taking out a loan, but I'll be fine. I'll be able to pay it off.” While signing up was easy, everything that came later felt almost unbearably hard. Her freshman year, she acquired between $15,000 and $16,00 in loans. The next year, she accumulated another $13,000 or so, and the same was true of her junior year. “No light bulbs went off during those years, I thought everything was going to be okay,” she recalls. “And then senior year, it hit. That’s when I started getting emails that asked me to fill out forms and figure out my exit plan. I was going to have to start paying soon.” That last year, Anguiano received less money in subsidized and unsubsidized loans when she filled out the FAFSA, but she still needed to finish her degree. She ended up signing up for what was called a Perkins Loan, which was administered by her school and had higher interest at the time than regular federal loans. “I honestly have no idea to this day what it is that I signed up for,” she says. “I just knew that I needed $16,000 to finish off the year’s worth of tuition.” 

After graduating undergrad with a B.A. in education in May 2017, Anguiano felt lucky to get a full ride to attend grad school, where she studied higher education administration. She put off thinking about the loans again for a while. “I didn't even know how much I had accrued in total across the Perkins loan and the subsidized and unsubsidized loans until May of 2019, when I was graduating with my masters,” she says. Then one of her grad school friends, brought up in conversation how they’d need to start paying loans again after graduation. “And I'm like, ‘Crap, I had no idea,’” she remembers. She started paying off her loans in December 2019, right as she kicked off her career in education.

Soon, the pandemic would hit, and she’d benefit from the federal pause on loans that came with it, meaning she wouldn’t have to pay interest on her federal loans and she could stop paying altogether if needed. “The no interest has helped a lot, but I’ve still got a pretty hefty amount to pay,” she said. Anguiano kept making payments and set the goal of being debt-free by age 30. But she realized her goal couldn’t be achieved while chasing the original career she set out to do. 

Her monthly loan payments were about $470 to $500 each month, a significant chunk of her take-home pay working in education. Eventually, she switched careers, starting a corporate role earlier this year. “The reason wasn't solely the salary, but the salary jump was very significant,” she says. “Now, I'm able to put money towards those loans, while also not having to live paycheck to paycheck like I was when I was working in education.” 

When it comes to the Biden Administration's decision on federal loans, she says that she wishes they’d do more to acknowledge “how disproportionately these student loans are impacting BIPOC communities, particularly those within the Black community.” 

“As for the 10K for Pell Grants,” she adds. “I think it’s a good start at looking at how we can best approach the student loan debt crisis from an equitable lens. I’m still a little concerned as to how much this will actually help in the long run once the interests start to kick in again after the final extension concludes at the end of the year. For now, I’m a little more relieved than I thought I’d be and am looking forward to seeing what other solutions the administration has in place for the future…They need to look at the big picture — if we want to see an equitable and inclusive America, that's not going to happen if we're just going to rack up interest again.” 

Anguiano wishes she’d had more opportunities to learn financial literacy before signing up for all the loans. “I also have a lot of thoughts and feelings about FAFSA, just generally speaking,” she says. “I think it's exploitative, particularly for BIPOC communities, who, unfortunately, based on the historical structure of our country, are more susceptible to not having access to financial literacy. I wish that I had known more, but at the time, I was just so desperate. I needed the money. At the time I was like, ‘Sure, sign me up to be $50k in debt, and then we'll figure it out later.’”

Dorothy says her biggest mistake when it comes to her $50,000 in student loans (which are split pretty evenly between private and federal loans) was that she put off dealing with them. “It was overwhelming and I still think it is,” she says. “I’d see the amount I’d owe and it was so frustrating. I still feel like I don’t know what I”m doing.” 

Like many students, she deferred her payments for six months after graduating and was nervous to look at what she owed. “My private loans were increasing in interest, and I didn’t realize that until later, and then it was a wake-up call,” she says. “Eventually, I forced myself to sit down and run the numbers, and I decided I was going to do the debt avalanche method.” This meant she’d work to pay off the debt with the highest interest rate first, while also making minimum payments on the rest. Right now, she pays $850 in private loans and $230 in federal loans a month and owes a total of $50,000. 

“It really puts a strain on my budget in the sense that I haven’t been able to move forward into my future in the way I’d like to,” says Dorothy, who works as an account coordinator. “I live with my parents and I do have my share of expenses, but I’m not 100% financially independent yet, which is frustrating for me as someone who's been working full time for three years.” 

She believes every high school senior should have to take a personal finance class that talks about loans. “I did take a personal finance class, but it didn’t cover stuff like this — instead it was basic stuff like budgeting in a vague kind of way and maybe stocks. There should be a class that’s offered for people who are planning on going to college or buying a home, to help them come up with a concrete plan for how they’re going to pay and how this all will impact them.” 

Growing up, Shelby Arena’s Catholic school teachers and counselors constantly encouraged her to look into expensive, “good” colleges. Her parents, who didn’t go to traditional four-year schools, recommended the same. “I never even considered community college or a state school,” she says. “But I wish I had.” She attended Canisius College, and ended up getting a few federal loans and taking out the rest through her dad’s credit union. The latter had a 6.25% interest rate.

It wasn’t until she started working, first for a non-profit and then for an abortion clinic, she realized how long it would take to pay that money off. She had to take side jobs and was working more than 70 hours a week. She did a short stint in grad school and did forbearance during that time, meaning she and her lenders agreed she could stop paying. “But I didn’t realize your interest keeps accruing,” she says. “That was not explained to me at all.” 

Eventually, she was forced to leave grad school and change industries. She began working for New York State as a contact tracer during the pandemic.  She quickly got promoted and began making enough money to pay off her loans, but the mental toll of the nature of the work got to her. She eventually left the gig, despite the fact it was the highest salary she’d ever made. By the end of her time there, she says she was so drained, she had to go back to therapy and the stress of the job began impacting her physical health — she was having liver and GI issues. The medical bills began piling up, even though she had insurance. 

This past April, she refinanced and found she still owed $45,000. She graduated in 2016 with $45,785 in debt. “I didn’t even pay off $1,000 in the last six years, which blows my mind, and it’s due to interest and some periods of forbearance and deferment,” she says. "Since refinancing, her interest rates are cut about in half, at 3.18%, which she says is a relief. 

But, because she refinanced her federal loans and consolidated to a private loan before the Biden Administration made its decision on federal loans, it means she won't benefit from the $10,000 in forgiveness. “I wish he would have done it sooner. The whole thing makes me angry, it’s so unfair. I fell victim to false promises and I’ve been so disillusioned by the whole system,” she says. “There needs to be a bigger conversation about student loan cancellation so that more people benefit. I know that there are people in much worse situations than me, as well. 

Arena says if she could go back in time to when she was 17 or 18, she wishes she would have done more research — but she also thinks that lenders break things down in a way that's difficult for teenagers to understand, which she believes is predatory. “Even if I had read all the fine print, which I wish I had, I don’t think I would have understood it. I wish they would have explained things better on the phone. I didn’t understand all the jargon, or that I’d still be paying interest during times I did forbearance. We’re kids when we’re signing up for this, and they should really bring it down to our level.” 

Sallie Mae hasn’t responded to Refinery29’s request for comment about their loans having high interest. Editor's note: One of the writers on this story, Molly Longman, also attended Drake University.