US student loan crisis deepens in 2024 as interest rates rise and payment pause ends

For US student loan holders, 2024 has been a turbulent year, marked by significant changes and unresolved issues.

Many borrowers saw their financial difficulties worsen due to rising interest rates and the end of the long-standing payment pause.

Although the debut of the Saving on a Valuable Education (SAVE) plan showed promise, delays in its implementation only compounded the problems.

While progress was made, including the forgiveness of loans for public servants, large-scale relief initiatives encountered obstacles, leaving millions of borrowers in a precarious position.

On Dec 20, the Biden administration unexpectedly canceled two comprehensive student loan forgiveness initiatives.

Once seen as a lifeline for an estimated 30 million borrowers, these programs aimed to provide relief to those in dire financial need and address the soaring loan balances caused by compound interest.

If enacted, these initiatives could have significantly reduced the debt burden for many American students.

Citing agency flexibility as justification, the Department of Education formally retracted the proposed regulations, known as the Notice of Proposed Rulemaking (NPRM), through notices published in the Federal Register.

This move, made just weeks before Donald Trump's swearing-in, may signal that the government anticipated political and legal challenges that could halt or dismantle the project.

“The Department has also concluded that withdrawing the NPRM will ensure agency flexibility in re-examining the issues and exploring options and alternatives with stakeholders in the future,” reads the notice from the Department of Education, published in the Federal Register on Dec 26.

While this decision dashed hopes for broad relief, officials may have intentionally abandoned the programs to safeguard future efforts.

The cancellation may prevent the incoming administration from taking unfavorable action, allowing more time to review and refine these proposals under better circumstances.

Though millions have been devastated by the cancellation, there is still hope for relief.

Ongoing initiatives, such as Teacher Loan Forgiveness (TLF) and Public Service Loan Forgiveness (PSLF), continue to provide lifelines for borrowers.

For government workers and nonprofit employees, PSLF remains a strong option, offering to pay off federal student loans after 10 years of qualifying payments.

Meanwhile, TLF provides forgiveness of up to $17,500 for teachers who have worked in low-income schools for five consecutive years.

In addition to these programs, the Biden administration recently announced that nearly 55,000 public service workers had $4.28 billion in debt forgiven, as part of the broader $56.5 billion forgiven for over one million borrowers under income-driven repayment plans.

For borrowers defrauded by schools or those who are permanently disabled, other programs have cleared billions in debt.

While the end of 2024 may feel like a doomsday scenario for many borrowers, relief initiatives will continue.

The fight for widespread student loan forgiveness is far from over. Although plans for mass forgiveness are currently on hold, ongoing targeted relief efforts are still in place.

Advocacy groups are urging the government to expedite relief for thousands of borrowers already enrolled in current programs.

State-specific relief programs and income-driven repayment plans may also offer additional support for those navigating their repayment journey.