How to Relieve Student Debt: Effective Strategies for Borrowers

Student debt remains a significant financial challenge in the United States. College costs have surged in recent decades, with tuition rising by an average of 5.6% per year since 1983, outpacing both inflation and other household expenses.

This blog breaks down the major relief options, including IDR, PSLF, forgiveness programs, military, and state benefits. We’ll also cover practical best practices, outlining who qualifies for each program, how they work, and the key factors that shape long-term outcomes.

TL; DR:

• IDR Plans: Payments based on income, with forgiveness after 20–25 years.

• PSLF: Loan forgiveness for public service workers after 120 qualifying payments.

• TLF: Teachers can get up to $17,500 in loan forgiveness after 5 years.

• Discharge Programs: Borrower Defense and TPD Discharge offer full loan cancellation.

• State & Military Relief: Specific programs for state employees and service members.

Income-Driven Repayment Plans (IDR)

IDR plans adjust federal loan payments based on income and family size, often lowering monthly costs and reducing the risk of delinquency. As of 2025, nearly 7.7 million borrowers are enrolled in the SAVE Plan, demonstrating its rapid adoption as the most popular option among borrowers.

Core features

• Payments can be as low as $0 for low-income borrowers.

• Loan forgiveness is available after 20–25 years of qualifying payments.

• Plans include IBR, ICR, PAYE, and SAVE.

• SAVE covers unpaid interest, preventing balances from ballooning.
  

Financial effects

• The 2024 issue brief from the White House's Council of Economic Advisers highlights the benefits of Income-Driven Repayment (IDR) plans like the Saving on a Valuable Education (SAVE) plan.

• The SAVE plan waives unpaid interest at the end of each month, preventing loan balances from growing due to unpaid interest.

• For borrowers with $21,000 or less in federal student loans, the SAVE plan shortens the repayment period to as few as 10 years, leading to more rapid loan forgiveness.

• SAVE is compatible with the PSLF program, allowing borrowers in qualifying public service jobs to benefit from both lower monthly payments and loan forgiveness after 10 years of qualifying payments.
  

Requirements

• Borrowers must submit their Adjusted Gross Income (AGI) and family size annually.

• Missing recertification shifts borrowers back to the Standard Repayment Plan.

Comparison of IDR Plans

Plan	Payment Amount	Forgiveness Timeline	Key Notes
IBR	10–15% of discretionary income	20–25 years	Best for high debt-to-income borrowers
ICR	20% of discretionary income or 12-year fixed (whichever is less)	25 years	Only option for Parent PLUS (via consolidation)
PAYE	10% of discretionary income, capped at the Standard Plan amount	20 years	Limited to newer borrowers with specific loan dates
SAVE	5% (undergrad) or 10% (grad) of discretionary income	20–25 years; ≤$12k forgiven in 10 years	Stops unpaid interest from growing

Now that we've covered how IDR plans work, let’s explore the Public Service Loan Forgiveness (PSLF) program and its benefits for those in public service.

Public Service Loan Forgiveness (PSLF)

PSLF cancels federal loan balances after 120 qualifying payments for borrowers working full-time in public service or nonprofit roles.

Eligibility

• Requires Federal Direct Loans; FFEL or Perkins loans must be consolidated.

• The borrower must work full-time for a qualifying employer.

• Payments must be made under IDR or another qualifying plan.
  

Advantages

• Forgiveness is federally tax-free, unlike some other programs.

• Periods of military service, deferment, and certain waivers now count toward PSLF.
  

Tools and process

• Use the PSLF Help Tool to verify employer eligibility and track progress.

• Certify employment annually to ensure qualifying payments are counted.

Also Read: Strategies to Pay Down Debt Faster: A Step-By-Step Guide

With a better understanding of PSLF, let's look at how borrowers can potentially qualify for loan discharge through Borrower Defense or School-Related Discharges.

Borrower Defense and School-Related Discharges

Borrowers misled by schools or affected by closures may qualify for full loan discharge.

Programs

• Borrower Defense to Repayment – for students defrauded or misled by institutions.

• Closed School Discharge – for students whose schools shut down while they were enrolled.
  

Process

• File claims with the Department of Education.

• Provide evidence such as misleading ads, catalogs, or communications.

• Group discharges apply to large-scale fraud cases.
  

Limitations

• Most claims must be filed within three years of leaving school, although policy updates may adjust these timelines.

• Denied claims can sometimes be resubmitted with stronger documentation.

Next, we’ll dive into Teacher Loan Forgiveness (TLF) and the specific relief available for educators in low-income schools.

Teacher Loan Forgiveness (TLF)

Teacher Loan Forgiveness (TLF) offers relief for educators working in low-income schools. After five consecutive years of service, teachers may qualify for up to $17,500 in loan forgiveness. Unlike some other federal programs, the forgiven amount is not treated as taxable income.

Eligibility criteria

• Must be a “highly qualified” teacher (state certification/licensure required).

• High-need subject areas (math, science, special education) qualify for the maximum amount.

• Service must be full-time and consecutive.
  

Special provisions

• Teachers in federally declared disaster zones may be eligible to pause service requirements for up to one year.

• The school’s Chief Administrative Officer must sign applications.
  

Also Read: Starting to Pay off Struggling Debts and Managing Them

In cases of permanent disability, the Total and Permanent Disability (TPD) Discharge program offers a path to loan cancellation. Let’s explore how it works.

Total and Permanent Disability (TPD) Discharge

TPD discharges cancel federal loans for borrowers who are unable to work due to a permanent disability.

Application process

• Submit medical certification, SSA disability determination, or VA disability designation.

• Applications can be filed online, by mail, fax, or email.

• Nelnet manages TPD discharges on behalf of the Department of Education.
  

Monitoring period

• Non-veteran borrowers are subject to a 3-year monitoring period with income reporting requirements.

• Veterans are exempt from ongoing monitoring.
  

Tax considerations

• Discharges are not federally taxed through 2025, though some states may treat them as taxable.
  

Also Read: How to Improve Student Loan Consolidation in 2025

For military service members, there are unique loan relief options. Let’s review the key benefits available under military service.

Military Service Member Benefits

Active-duty and reserve service members receive targeted loan relief and repayment benefits.

Key provisions

• Interest rate cap of 6% under the Servicemembers Civil Relief Act.

• Military deferment and 0% interest periods during certain deployments.

• Automatic PSLF credit for active duty periods since 2022, even during deferments.
  

Additional relief

• National Defense Student Loan Discharge for hostile-fire service zones.

• The DD-214 form expedites service certification for PSLF.
  

In addition to federal programs, many states and employers offer targeted relief options. Here’s a look at some state-sponsored and employer-specific loan repayment programs.

State-Sponsored and Other Assistance Programs

Many states and employers offer loan relief specifically tailored to critical fields such as teaching, nursing, law, and community service.

Examples

• Mississippi Winter-Reed Teacher Loan Repayment Program.

• New Mexico Teacher Loan Repayment Program.

• Connecticut’s volunteer-based program offers up to $20,000 over a four-year period.

• Employer programs may offer up to $5,250 annually in tax-free repayment.
  

Targeted fields

• Behavioral health, nursing faculty, veterinary medicine, and cybersecurity.

• Some states extend relief to both private and federal loans.
  

Tax treatment

• Varies by state; some treat forgiven loans as taxable income while others exempt them.
  

To make the most of these relief programs, it’s crucial to apply smart financial strategies. Let’s cover best practices for relieving student debt.

Best Practices for Relieving Student Debt

Effective debt relief goes beyond enrolling in programs. Borrowers who apply consistent financial practices improve their chances of long-term success and avoid setbacks.

Stay current with annual requirements

• Recertify income and family size on IDR plans every year. Missing deadlines causes payment spikes under Standard Repayment.

• Submit yearly PSLF employment certification forms to keep payment counts accurate.
  

Prioritize high-impact strategies

• Pay down private loans aggressively while using federal programs (IDR, SAVE, PSLF) to stabilize federal loan payments.

• Consider lump-sum payments toward principal when receiving bonuses or tax refunds.
  

Maintain financial discipline

• Build an emergency fund with at least three months of expenses. 

• Research indicates that 25% of borrowers participating in Income-Driven Repayment (IDR) plans default on their required minimum payments. Therefore, it's advisable to avoid taking on additional student loan debt unless absolutely necessary.
  

Use financial literacy tools

• Track repayment progress through dashboards provided by loan servicers, and cross-verify with your records.
  

Plan for policy changes

• Stay updated on Department of Education announcements, such as the upcoming launch of the new Repayment Assistance Plan (RAP) in 2026, to adjust your strategies proactively.

• Be prepared for changes in the tax treatment of forgiven loans after 2025, as temporary federal exemptions are scheduled to expire.
  

Safeguard against scams

• Legitimate relief programs never charge upfront fees. Avoid third-party companies promising guaranteed forgiveness or faster approval. Rely on StudentAid.gov and official servicer communications.
  

How Shepherd Outsourcing Services Can Help

At Shepherd Outsourcing, we make managing student debt easier. We work directly with creditors to reduce your debt, negotiate better terms, and protect your interests.

Here’s how we assist:

• Customized Debt Plans: We evaluate your financial situation and recommend the most suitable debt relief options.

• Creditor Negotiation: We handle negotiations to lower debt and interest, making payments more manageable.

• Legal Protection: We ensure all actions are compliant, protecting you from lawsuits or garnishments.

• Continuous Support: We guide you through the process, ensuring long-term success in managing debt.
  

Understanding student debt doesn’t have to be a solo journey. Shepherd Outsourcing is here to provide the expertise, support, and peace of mind you need to regain control over your financial future.

Conclusion

Joint loans can offer significant benefits, but they come with shared responsibilities and risks that must be carefully considered. Whether it’s securing better terms, increasing loan amounts, or sharing repayment duties, understanding the full scope of joint loans is crucial for success.  

At Shepherd Outsourcing, we simplify the process, protect your interests, and help you make the right decisions for your financial future.

Contact us to take control of your finances today. 

FAQs 

Q: Can I consolidate my student loans into a joint loan with a co-borrower?

A: No, federal student loans cannot be consolidated into a joint loan with another person. You can consolidate federal loans into a Direct Consolidation Loan, but the consolidation only involves the borrower, not a co-borrower. Joint loans typically apply to other types of debt, like mortgages or auto loans.

Q: How does refinancing affect my eligibility for loan forgiveness programs?

A: Refinancing federal student loans into a private loan makes you ineligible for federal forgiveness programs like PSLF. Federal protections, including deferment and income-driven repayment plans, are lost when refinancing with a private lender, so it’s important to consider these factors before refinancing.

Q: Can I still apply for student debt relief if my loans are in default?

A: Yes, you can still apply for certain relief programs, including IDR plans and PSLF, even if your loans are in default. However, you may need to rehabilitate your loans or consolidate them before qualifying for some of these options.

Q: Are there any state-specific student loan relief programs I should know about?

A: Yes, many states offer student loan repayment assistance for specific professions or locations. For example, states like Mississippi and New York provide repayment assistance for teachers, while California offers benefits for those working in health care or legal services. Check your state’s programs for eligibility.

Q: Does student loan forgiveness count as taxable income?

A: Generally, student loan forgiveness under federal programs like PSLF is tax-free. However, forgiven amounts from private lenders or certain state programs could be taxable. Always consult a tax professional to understand how forgiven debt will be treated based on your specific circumstances.