of President Joe Biden student loan cancellation plan seemed like a dream come true for millions of borrowers when it was unveiled in August. Now they face the nightmarish possibility that the money they were planning to save will have to be paid back after all.
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Student Loan Forgiveness: What to do if you have already applied
A lawsuit filed by six Republican-leaning states challenging the legality of the debt relief program has led to a recent court order that temporarily blocked him. The US Department of Education has stopped accepting applications while legal battles unfold.
Now, there are growing concerns about whether the program will fulfill its mission of canceling up to $20,000 in student loan debt per borrower. James Kvaal, Undersecretary for Education, said in a recent court filing that if the Department of Education cannot provide debt relief, “there could be a historically large increase in the amount of federal student loans in arrears and defaults.”
Whatever happens, the United States will always be home to a huge amount of student loan debt. During the third quarter of 2022, student loan balances were $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 package ends up being permanently stalled, federal student loan borrowers will have to start repaying their loans in early 2023. That’s when the break current refund must end.
The amount of student loan debt in the United States — combined with the number of borrowers at risk of default — will likely reignite conversations about the role employers can play in helping their employees reduce their debt. That might be the best long-term solution, according to Kristen Carlisle, chief executive of improvement at worka provider of 401k benefits and financial wellness.
“Amid all this uncertainty, one thing is clear: Not all student debt will go away anytime soon and it’s time for employers to act,” Carlisle told GOBankingRates in an emailed statement. “The billions of dollars in student debt owed to the United States is a national crisis and an enormous burden on the millions of Americans who carry this debt…Employers must partner with employees to help find solutions .”
A number of leading companies have programs in place to help employees pay off student debt. Many government agencies do the same 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, although some federal agencies have lower limits, according to the Cappex website. Employees must agree to either continue working for the agency for at least three years or repay the full amount of the loan.
The Ask the Money Coach website lists more than 80 agencies that help with college loans through LRAP, ranging from large federal agencies such as the Departments of Agriculture, Commerce, Defense, Education, and of Energy to smaller independent agencies like the Federal Deposit Insurance Corporation, Federal Elections Commission, Federal Energy Regulatory Commission, Federal Housing Finance Agency, Small Business Administration, and Smithsonian Institution
Federal employees may also be eligible to have their loans forgiven under the Civil Service Loan Forgiveness Program. Under this program, you can get your entire remaining direct loan balance forgiven after making 120 qualifying payments or 10 years’ worth.
To learn more about getting student loan help as a government employee, visit Office of Personnel Management (OPM) website.
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Here is an example of how four federal agencies provide student loan repayment benefits:
- Department of Justice PARL: Eligible attorneys can get $6,000 a year in repayment assistance with a lifetime maximum of $60,000, according to Best Colleges. Participating attorneys must sign an agreement with the DOJ and commit to an initial three-year service obligation.
- Indian Health Service Loan Repayment: Eligible health 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 at a designated Indian Health Program site.
- National Health Service Corps (NHSC) Rural Community Loan Repayment Scheme: 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.
- State Department: According to the State.gov website, its Student Loan Repayment Program (SLRP) allows employees to reduce student loan debt incurred to support educational programs the employee has already completed or, in the case of Parent Loans. Plus, followed by the employee’s child. Payments are made directly to the lender or the employee’s loan servicer.
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This article originally appeared on GOBankingRates.com: 4 government agencies you may not know will help you pay off your student loan
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