What does Biden’s latest student debt forgiveness deal mean for you? Up to 6.9 million Americans will have their loans CANCELED next month under fast-tracked plan
- The Biden administration announced it was accelerating a forgiveness plan
- Eligible borrowers took out small loans and have been paying them back for ten years
- Eligible borrowers must be enrolled in the SAVE repayment plan
President Joe Biden has fast-tracked a new student loan forgiveness plan that will wipe out some borrowers’ debts paid off over the past decade.
The plan, which goes into effect in February, will apply to borrowers who took out relatively small loans and are enrolled in the Biden administration’s new income-driven payment plan.
In a statement, President Biden said the move, which was originally scheduled to begin in July, would take place “six months ahead of schedule.”
It’s part of an effort by the Biden administration to provide relief to borrowers after the Supreme Court in June struck down his broader student loan forgiveness plan, which planned to wipe out more than $400 million in debt.
What are the details and who will benefit?
President Joe Biden has announced a new student loan forgiveness plan that will wipe out the debt of certain borrowers
Who is eligible for the new plan and when will it take effect?
Department of Education officials confirmed that borrowers who originally took out $12,000 or less for college and have made at least 10 years of qualifying repayments will see their debt completely forgiven in February.
Borrowers must also participate in the new income-driven repayment plan, known as SAVE.
The provisions come six months ahead of schedule and will especially help community college borrowers, low-income borrowers and those struggling to repay their loans, according to a White House statement.
How many people are eligible?
Officials have not announced the exact number of people who will be affected by the cancellation, or the dollar amount that will be forgiven.
But the Biden administration said anyone who originally took out a loan of $12,000 or less should apply for the SAVE program as soon as possible.
While 30 million people are eligible for the SAVE plan, only 6.9 million are currently enrolled.
Borrowers must be enrolled in the new income-driven repayment plan, known as SAVE, to qualify for forgiveness under the latest deal
What is the SAVE subscription?
The Saving on Valuable Education, or SAVE plan, opened for registration in August 2023.
The SAVE plan offers much more generous terms than several other income-driven repayment plans it was designed to replace.
Previous plans offered cancellation after 20 or 25 years of payments, while the SAVE plan cut that in half for those who took out loans for $12,000 or less.
For every $1,000 you borrow above $12,000, an additional year of payments is added on top of the ten years. For example, if someone originally took out a $13,000 loan, the remaining balance will be canceled after eleven years of qualifying monthly payments.
About 3.9 million people enrolled in the plan already have no monthly payments, according to the White House.
What else has the Biden administration done for loan forgiveness?
The announcement comes after similar actions by the Biden administration in recent months to reduce student debt.
Shortly after loan payments restarted in October, Biden approved the cancellation of $9 billion in student debt for 125,000 people, including 53,000 beneficiaries of the Public Service Loan Forgiveness program.
The president is also separately pursuing another plan for widespread cancellation.
After the Supreme Court rejected Biden’s first plan, he asked the Department of Education to try again under a different legal authority. The department has been working on a new proposal that would provide relief to specific groups of borrowers.