The Biden administration on Wednesday said it is automatically forgiving $1.2 billion in student debt for 153,000 borrowers. Loan holders whose debt will be discharged will receive an email from President Joe Biden today informing them of the forgiveness, the Department of Education said.
The debt relief is the latest push from the White House to address the nation’s $1.77 trillion in student debt after the Supreme Court last year invalidated the Biden administration’s plan for broad-based student loan forgiveness. That plan would have helped more than 40 million borrowers each wipe away up to $20,000 in debt.
With this latest round, the Biden administration said it has approved loan relief for nearly 3.9 million borrowers, many of whom have been repaying their debt for decades. The 153,000 borrowers who qualify for the latest debt forgiveness are those who are enrolled in the Saving on a Valuable Education (SAVE) repayment plan and who have made at least 10 years of payments.
“[I]f you’ve been paying for a decade, you’ve done your part, and you deserve relief,” said U.S. Secretary of Education Miguel Cardona in the statement.
Who qualifies for this new debt forgiveness?
The Biden administration said 153,000 borrowers who are enrolled in the SAVE plan are eligible.
Those who are eligible have been enrolled in repayment plans for at least 10 years and originally borrowed $12,000 or less for college, the Education Department said.
For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments, the department added.
What steps do borrowers have to take?
None, according to the Education Department.
People receiving a loan discharge will get an email from Biden today about their loan forgiveness, and don’t need to take further action. Servicers will process the forgiveness in the next few days, and borrowers will see their loans forgiven in their accounts, according to the statement.
What is the SAVE plan?
The SAVE plan is income-driven repayment program, or IDR, that was created by the Biden administration. IDRs peg a borrower’s monthly payment to their income, lowering their financial burden.
The SAVE plan was designed to fix some problems with older IDR programs, such as allowing interest to snowball on a borrower’s debt.
All borrowers enrolled in SAVE can receive forgiveness after 20 years or 25 years of repayments, but the White House has developed the shorter 10-year forgiveness period for people with smaller balances.
Borrowers can apply for the SAVE plan here.
How many people are enrolled in SAVE?
There are currently 7.5 million borrowers enrolled in SAVE, the Education Department said on Wednesday. About 4.3 million of those have a $0 monthly payment.