Biden announces ‘immediate’ student loan forgiveness for some borrowers
Launched after the Supreme Court rejected President Biden's sweeping $10,000 loan forgiveness plan last summer, the SAVE program for those who borrowed less than $12,000, is set to begin in February, months ahead of schedule.
The Biden administration on Friday announced its latest attempt to chip away at student debt. Cancellation of debt under the SAVE plan, which forgives debt for borrowers who initially took out less than $12,000 in loans and have made payments for 10 years, will begin in February instead of July as originally planned.
“This action will particularly help community-college borrowers, low-income borrowers and those struggling to repay their loans,” according to a White House statement. “And it’s part of our ongoing efforts to act as quickly as possible to give more borrowers breathing room so they can get out from under the burden of student loan debt, move on with their lives and pursue their dreams.”
Federal student loan borrowers typically must repay their debts for 20 or 25 years to have their remaining balances discharged under the Education Department’s income-driven repayment plans. The SAVE plan offers a shorter timeline to forgiveness for borrowers who took out a relatively small amount of debt. Nearly seven million borrowers are now enrolled in the program, according to the administration, although it’s not clear exactly how many would qualify for immediate forgiveness.
Another provision of the plan that could cut some borrowers’ payments in half is scheduled to take effect in July. Payments on loans borrowed for undergraduate school will be reduced from 10% to 5% of discretionary income, while payments on loans borrowed for both undergraduate and graduate school will be between 5% and 10% of the borrower’s income, based upon the original loan amount.
Republicans have criticized the administration’s debt-relief efforts as election year ploys that will add to the national debt.
“President Biden is downright desperate to buy votes before the election — so much so that he greenlights the Department of Education to dump even more kerosene on an already raging student debt fire,” said Rep. Virginia Foxx, R-N.C., chair of the House Education Committee. “It would surprise no one if the department relied on infants playing with abacuses to balance its books. It is a complete and utter disaster.”
Related: Student loan debt: Biden forgives another $4.8B for 80K borrowers
Even though the Supreme Court struck down Biden’s broad debt relief program last summer, the administration still has approved $132 billion in relief for more than 3.6 million borrowers under other Education Department programs. The department also plans to continue announcing loan forgiveness under previously announced initiatives, such as those targeting borrowers who’ve been paying for decades and public service workers.
In addition, the Education Department is working on a new “Plan B” student debt relief plan that will target various types of borrowers, but this plan, which was announced in October, is still months away from a lengthy regulatory process.