Meet the millennials who got student-loan forgiveness and now have the freedom to save for retirement, grow their families, and consider going back to school

• Biden has implemented targeted student-loan forgiveness efforts over the past few years.
• BI spoke to some millennials who received relief through different programs.
• It's allowed them to save for retirement and make investments in their futures.

Scott M. Smith, 40, wasn't expecting student-loan forgiveness.

After receiving his master's in education administration in 2015 — preceded by his undergraduate education degree in 2008 — Smith held a student-loan balance of about $30,000 from both degrees. Since his work has been in public service, currently as a teacher, Smith decided to apply for the Public Service Loan Forgiveness program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

But despite working full time for a qualifying employer, Smith said, he wasn't hopeful for forgiveness because his student-loan servicer told him in 2022 he hadn't met his qualifying payments.

That all changed with a letter from his servicer — reviewed by Business Insider — on February 15, 2023, stating: "We determined you have successfully met the requirements of the PSLF Progam and your loans listed below have been forgiven. Thank you for your public service!"

With that letter, Smith's remaining $23,086 student-debt balance was officially gone.

"I was shouting it from the rooftops and walking around my school like, 'Hey, everybody who's been out of school for 10 years or so,' advertising that," Smith told BI. "So then I was helping a lot of my colleagues to get that information, as well."

Since the Supreme Court blocked President Joe Biden's broad student-loan forgiveness plan last summer, the Education Department has erased debt piecemeal by focusing on existing programs like PSLF. Many of these previously did not work as intended due to administrative hurdles and paperwork errors that left borrowers paying off more than they might've owed.

Such programs have provided relief to millions of borrowers over the past few years, including borrowers with a total and permanent disability, those defrauded by the schools they attended, and those who had made at least 20 years of qualifying payments on income-driven repayment plans but had yet to receive the relief they were eligible for.

The relief is a particular bright spot for people of Smith's age.

Millennials who've gotten their loans wiped out told BI that they're now able to celebrate by investing in their futures and pursuing other life goals, such as buying a home, that their generation has famously lagged in pursuing.

In the $1.7 trillion student-debt crisis, which affects over 40 million Americans, millennials, who are roughly 28 to 43, today hold a significant portion of the load. According to recent Federal Student Aid data for the third quarter of 2023, 14.8 million student-loan borrowers ages 25 to 34 — older Gen Zers and younger millennials — hold $483 billion outstanding in student debt. That same data shows that 12.2 million borrowers ages 35 to 49 — older millennials and younger Gen Xers — hold $534 billion outstanding in student debt.

According to the Federal Reserve, the median amount of student debt borrowers held in 2023 was between $20,000 and $24,999, and borrowers with higher levels of education were more likely to carry larger student debt loads.

This relief could not have come at a better time for Smith. He said that he and his wife were hoping to grow their family with a second child but that his nearly $600 student-loan payments being deducted from his bank account each month strained their budget, making it difficult to plan for baby No. 2. The loan forgiveness has freed up their budgets to buy a larger car for their family — and he and his wife are now expecting.

"We have another thousand dollars every two months that we could put into something else," Smith said.

Knowing how many borrowers have student debt, Smith said he's grateful for this relief, which allows him to move forward in life and grow his family without that financial burden weighing him down.

"It was huge. It really started things to be as great as they are right now," Smith said. "I'm the happiest that I've ever been, and that was a definitive point. February of 2023 was when things started to get better again."

The freedom to go back to school

For Paul Smylie, 39, student-loan forgiveness means something else.

After graduating with an undergraduate degree in geography in 2007, Smylie had a student-debt balance of just over $36,000. He began repaying those loans on an income-driven repayment plan, which promises debt relief after at least 20 years of qualifying payments. As of 2024, Smylie was able to get his balance down to $9,811 — but that was after paying about $46,000 because of interest.

Given that Smylie had not yet completed his 20 years of payments, he didn't qualify for relief through his income-driven repayment plan. However, Biden's new SAVE income-driven repayment plan offered a glimpse of hope — a provision within the plan allowed for student-loan forgiveness on loans with an original balance of $12,000 or less after as few as 10 years of payments.

After SAVE was implemented in July 2023, Smylie enrolled in the plan and had four loans remaining to pay off — each of which was under $12,000. On February 21, the Education Department announced it would be implementing the new forgiveness provision ahead of schedule, announcing $1.2 billion in relief for 153,000 borrowers. To Smylie's surprise, he was one of them.

As of August 9, the 8th Circuit Court of Appeals has blocked SAVE. Students with loans enrolled in the program have been placed into forbearance pending the results of continued legal battles over whether the lower payments and forgiveness measures in the payment plan can continue.

While some experts have suggested a complete reversal of the SAVE plan could result in forgiveness being rolled back and loans being reinstated, the Associated Press reported that reinstating loans on such a large scale would be unreasonably costly and politically fraught, making such an outcome unlikely. However, it will be up to the courts to determine what to do with previously forgiven loans if the SAVE plan is ended entirely.

For Smylie, the forgiveness granted by SAVE has been a godsend.

"It was a total shock," Smylie told BI.

"I teach yoga, and so it was 20 minutes before I was supposed to start to teach a class and I see this email, and I'm like, 'Wait a minute, is this serious?' And I just couldn't process it," he said. "I remember having a hard time teaching. I was just in this fun little cloud of joy. But it's one of those moments you just never think would ever come true, and then it did."

This relief is allowing Smylie the freedom to "have real true financial goals" with his retirement — and it's even opening the door for him to consider furthering his education. The idea of returning to school or seeking higher education in the first place has brought diverging views across generations.

As BI has previously reported, many Gen Zers have chosen to forego college due to high student debt loads and the availability of jobs that don't require college degrees. But for some millennials, Gen Xers, and even boomers, going back to school is an opportunity to advance their careers, earn more money, and give themselves a chance at trying something new — an opportunity they might not have had when they were younger. For example, a report from Gallup and the Lumina Foundation found that "adults' interest in pursuing some form of higher education is at the highest level" the organizations ever recorded.

Smylie's student-loan forgiveness is giving him the financial freedom to consider doing just that.

"It's taken a weight off of me, but it also inspired me to go back to a master's program that I had my eye on for a bit," he said.

BI spoke with five financial advisors who primarily work with millennials. Each indicated that student debt remains among the top financial concerns their clients report having.

"There's not a lot of wiggle room in some cases as they're paying off student loans, to prioritize other short-term things or really save aggressively outside that debt," Chloe Moore, a certified financial planner who founded Financial Staples, told BI. "So having those student loans paid off really makes a difference."

The advisors said most of their clients who have student loans carry between $20,000 to $100,000 in student debt, with those who pursued master's degrees and other advanced education tending to hold more than $50,000. Regardless of the degree, the advisors said their clients with student loans tend to put off other major investments — like buying a house, saving for retirement, or starting a family — until their education debt feels more manageable, which they described as a subjective measure that varies by person.

"The hardest thing, I think, for millennials that have any range of debt is making those tough choices between saving, paying down debt, and investing because the loans can be pretty burdening on cash flow," said Keenan Casey, a certified financial planner for Facet Wealth. "It can mean that you're making some really, really tough choices with the other aspects of your life."

CiCora Leigh, 34, is all too familiar with the tough choices her student debt presented her. Leigh's educational path was unconventional — after graduating from high school in 2008, she fully funded her community-college education in Mississippi through scholarships and federal grants. However, after the death of a family member, she took a break from her education and decided to enlist in the Army with the hope that it would pay for her to eventually earn her law degree. Things didn't work out as she intended, though, and she ended up taking out about $70,000 in student loans to complete her degree at the University of Mississippi in business administration.

As a single mom, Leigh felt significantly weighed down by the debt. "It was really making things tight for me and my son," she said, adding that the debt was sinking her credit score.

All of that changed when she received a total and permanent disability determination from Veterans Affairs. In a rule first established under President Barack Obama, any student-loan borrower who can prove they are totally and permanently disabled is eligible for student-loan forgiveness. This determination can be made by the VA or a physician and includes any physical or mental impairment that inhibits employment.

The VA informed Leigh of her disability status in February 2023, and just five months later, the Education Department had wiped out her $72,000 student-loan balance.

"It was truly a relief," Leigh said. "I was able to use those funds to start putting toward my son's college fund, and then I was able to publish my second book. That was such a relief to receive the letter. I was so happy."

Saving for retirement

The monthly student-loan payments of nearly $500 that Beverley, 38, has been making since 2014 took a heavy toll on her finances.

Beverley — who requested her last name be withheld for privacy — told BI that when she first started her career in the nonprofit sector, she was paid a very low wage and struggled to afford her monthly student-loan payments from both her undergraduate and graduate degrees on top of her other basic expenses. This led her to go into forbearance for a year to allow her to afford her everyday needs.

"It was really hard," Beverley said. "Paying rent, paying for monthly bills and food and everything, that basically left $100 in my bank account for anything else. It was impossible to save money."

Beverley now works in the government and has been in the public sector her whole career, making her eligible for PSLF. But since she didn't start making payments until 2014, she thought she wouldn't see any student-loan forgiveness until 2024 at the earliest, assuming everything went perfectly with her paperwork.

A limited-time change implemented by the Education Department in October 2021 changed that. Using a waiver that expired in October 2022, the department allowed borrowers to count payments that were previously deemed ineligible for PSLF toward forgiveness progress, including some periods in which borrowers' loans were in deferment or forbearance. That was great news for Beverley — her loans were on forbearance for a year after she graduated while she was working at the nonprofit, meaning the waiver brought her to the payment threshold for forgiveness a year ahead of schedule.

On December 13 of last year, she finally received confirmation that her nearly $54,000 student-loan balance was wiped out. "Congratulations!" the letter from her servicer, reviewed by BI, said. "You have successfully met the requirements of the Public Service Loan Forgiveness (PSLF) Program and all or a portion of your loans listed below have been forgiven. Thank you for your public service."

This relief not only opened up hundreds more dollars each month to make payments toward her mortgage — it finally allowed her the freedom to put money toward retirement for the first time.

"The thing that I'm most excited about is saving for retirement," Beverley said. "I have a lot of money that I was putting towards loans that can now go towards my future. I feel like I'm starting really late for retirement stuff, but it's better than having to pay for however many more years if I didn't get the forgiveness."

Grayson Hofferber, a financial advisor and president of Millennial Wealth Management, says the cash-flow burden created by student-loan debt means many of the clients he counsels have to play catch-up for years to get on track for retirement or set up an education fund for their own children.

"I would say the vast amount of folks will focus on maximizing their retirement savings, whether through their 401(k) or their IRA, after paying off their student debt," Hofferber said. "For the majority of our clients, they generally will take that same kind of repayment dollar amount that they're putting toward student loans, and they'll reinvest that for their future. So they'll put that into an investment account, whether that's to buy a home or to pursue an early retirement."

Though some financial advisors noted that once borrowers unlock the money earmarked to pay down debt, they also often want to celebrate.

"Whether it be student loans, credit-card debt, auto-loan debt, any form of debt that someone's paid off that has felt like a burden for a prolonged period of time, there is the propensity to feel like they have been sacrificing and that they want and deserve to spend the money after that point," Casey said.

The financial advisors who talked to BI said that while their clients tended to be financially savvy and prone to prioritizing long-term investments, the post-student-loan splurge is a common phenomenon they see among millennials. And the splurge can take many forms — whether music festival tickets, or buying a Tesla, or taking an international vacation.

While retirement is still a ways away for Beverley, she said she's grateful for Biden's changes to PSLF — and the freedom it opened up for her to make larger investments down the road.

"The limited waiver opportunity basically saved me a year of payments that I would still be making now," Beverley said. "So, for me, it's like keeping a promise that was made a long time ago that if we work in public service, we can have this opportunity."