President Joe Biden announced that he is approving $1.2 billion in student debt cancellation for nearly 153,000 borrowers currently enrolled in the Saving on a Valuable Education (SAVE) repayment plan ahead of schedule.
The borrowers receiving relief are the first to benefit from a SAVE plan policy that provides debt forgiveness to borrowers who have been in repayment after as little as 10 years and availed $12,000 or less in student loans.
The loan repayment waiver was originally planned for announcement in July, but the Biden Administration implements this provision of SAVE and is providing relief to borrowers nearly six months ahead of schedule.
The Biden Administration will also be cancelling debt for those borrowers who are enrolled in the SAVE plan, have been in repayment for at least 10 years, and took out $12,000 or less in loans for college.
For every additional $1,000 a borrower initially borrowed, they will receive relief after an additional year of payments, the White House said. For example, a borrower enrolled in SAVE who took out $14,000 or less in federal loans to earn an associate’s degree in biotechnology would receive full debt relief starting this week if they have been in repayment for 12 years.
The U.S. Department of Education has identified nearly 153,000 borrowers who are enrolled in SAVE plan who will have their debt cancelled starting this week. According to the White House, those borrowers will receive an email from President Biden informing them of their imminent relief. Next week, the Department of Education will also be reaching out directly to borrowers who are eligible for early relief but not currently enrolled in the SAVE Plan to encourage them to enroll as soon as possible.
This shortened time to forgiveness will particularly help community college and other borrowers with smaller loans and put many on track to being free of student debt faster.
The Biden Administration estimates that under the SAVE plan, 85 percent of future community college borrowers in the U.S. will be debt free within 10 years. The Department will continue to regularly identify and discharge other borrowers eligible for relief under this provision on SAVE.
With this, the Biden Administration has approved a total of nearly $138 billion in student debt cancellation for almost 3.9 million borrowers through more than two dozen executive actions.
Under the SAVE plan, launched last year, monthly payments are based on a borrower’s income and family size, not their loan balance. The SAVE plan ensures that if borrowers are making their monthly payments, their balances cannot grow because of unpaid interest. And, starting in July, undergraduate loan payments will be cut in half, capping a borrower’s loan payment at 5 percent of their discretionary income. Already, 7.5 million borrowers are enrolled in the SAVE Plan, and 4.3 million borrowers have a $0 monthly repayment.
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