On Wednesday, the Biden administration made an announcement stating that it will automatically forgive $1.2 billion in student debt for 153,000 borrowers who are currently enrolled in the Saving on a Valuable Education (SAVE) repayment plan.
The loan forgiveness is part of the administration’s efforts to fix the country’s broken student loan system and help millions of Americans who are struggling with student debt.
The SAVE plan is an income-driven repayment program that was created by the Biden administration to address some of the problems with the previous plans, such as allowing interest to accumulate on the debt.
The SAVE plan caps the monthly payments at 10% of the borrower’s discretionary income and offers forgiveness after 20 or 25 years of payments, depending on the type of loan. However, the administration has also developed a shorter forgiveness period of 10 years for borrowers who originally borrowed $12,000 or less for college.
The borrowers who qualify for the latest debt relief are those who have made at least 10 years of payments under the SAVE plan and have not received forgiveness yet. The Department of Education said that these borrowers will receive an email from President Biden today informing them of their loan discharge, and that they do not need to take any further action.
The administration said that this is the largest group of borrowers to receive loan forgiveness through the SAVE plan so far, and that it expects more borrowers to qualify for forgiveness in the coming months and years.
According to the press release from the White House, this relief,
“Has given borrowers critical breathing room in their daily lives, allowing them to afford other expenses, buy homes, start businesses, or pursue dreams they had to put on hold because of the burden of student loan debt. President Biden remains committed to providing debt relief to as many borrowers as possible, and won’t stop fighting to deliver relief to more Americans.”
The administration also said that it has approved a total of $138 billion in student debt relief for more than 3.9 million borrowers since January 2021, through various programs and initiatives, such as the Public Service Loan Forgiveness (PSLF) and the income-driven repayment (IDR) forgiveness.
U.S. Secretary of Education Miguel Cardona said in a statement that the administration is committed to providing student debt relief to those who deserve it and need it the most. He said,
“The people getting the debt relief announced today have sacrificed and saved for a decade or more to make their student loan payments, have lower loan balances, and are more likely to have qualified for Pell Grants to attend college. Many SAVE forgiveness recipients come from lower- and middle-income backgrounds.
Many took out loans to attend community colleges. Some were at high risk for delinquency and default. That’s why the actions we’re announcing today do matter. “
Enrolling in SAVE is simple. Borrowers just need to visit studentaid.gov/save to begin.
