Major Student Loan Relief: Biden Administration Cancel $1.2 Billion
The U.S. Department of Education is canceling $1.2 billion in federal student loan debt for 150,000 borrowers, marking another step in the Biden administration’s efforts to relieve student loan borrowers. This latest move brings the total debt cancellation under the Biden administration to $138 billion for 3.9 million borrowers.
Education Secretary Miguel Cardona emphasized that the cancellation sends a message to borrowers with low balances, stating that those who have been paying for a decade have done their part and deserve relief. The cancellation will benefit borrowers enrolled in the Saving on a Valuable Education (SAVE) Plan who have been making payments for at least ten years and initially borrowed $12,000 or less for college.
For each additional $1,000 borrowed above $12,000, borrowers can receive debt cancellation after an extra year of payments. Additionally, all SAVE program enrollees receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.
Borrowers eligible for the debt cancellation will be notified without needing to take any action. President Biden is set to send an email underscoring his commitment to addressing the student loan debt issue, expressing hope that the relief will provide borrowers with more breathing room.
The administration accelerated the loan cancellation process, initially slated for July, with the latest move to free up capital for those burdened with significant debts. According to the Education Department’s financial analysis, as of February 20, 7.5 million borrowers were enrolled in the SAVE plan, with 4.3 million having zero-dollar scheduled payments based on income levels. Borrowers in the plan making non-zero payments save an average of $117 per month or over $1,400 per year.
Despite the Supreme Court’s block of the broader student loan cancellation plan last summer, providing relief to borrowers has been a notable policy win for the Biden administration. The administration continues to explore additional avenues for debt cancellation, including regulatory measures that could potentially lead to widespread debt relief for specific groups of borrowers. This includes those with balances exceeding their initial borrowed amounts, borrowers whose loans entered repayment decades ago, and those who attended programs lacking sufficient financial value. The ongoing efforts are part of the administration’s strategy to address student loan challenges, a topic likely to feature prominently in the 2024 presidential election.
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