WASHINGTON, D.C.– On Friday, the Biden-Harris Administration announced that in February, the Department of Education will start providing full forgiveness of loans for certain borrowers through the Saving on a Valuable Education (SAVE) Plan.
Eligible borrowers are those who have been making payments for at least ten years and originally received less than $12,000 or less in college loans explain the U.S. Department of Education.
According to the Department of Education, borrowers in the SAVE program who are part of the eligible group detailed above will have their debts canceled immediately starting next month, with no required action on the part of borrowers already enrolled in the debt cancellation program.
As of Friday, there are now 6.9 million borrowers already enrolled in the SAVE program, more than double the enrollment of the Revised Pay As You Earn (REPAYE) plan it replaced in August detail the U.S. Department of Education.
The Department of Education estimates that the SAVE plan will make 85% of community college borrowers debt-free in the next ten years and is intended to help those most likely to struggle with repaying their loans as the majority of borrowers currently in default originally borrowed $12,000 or less.
Previously, the Biden-Harris Administration had announced plans to implement the SAVE plan by Jul. 1, 2024, and other features of the program have also been accelerated including for every $1000 borrowed above the $12,000 threshold, a borrower can receive forgiveness after an additional year of payments detail the U.S. Department of Education.
That feature means that a borrower who had an original principal balance of less than $21,000 in student loans will be eligible for forgiveness faster than the 20-year timeline for undergraduate borrowers on the SAVE plan explain the U.S. Department of Education
“Beyond being the most affordable student loan repayment plan ever available, the Biden-Harris Administration designed the SAVE Plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before. Our ability to deliver this relief to borrowers months ahead of schedule is a testament to the Biden Administration’s commitment to delivering relief to as many borrowers as possible, as quickly as possible," said U.S. Secretary of Education Miguel Cardona. "With lower monthly payments, protection from runaway interest, and faster timelines to debt forgiveness, President Biden’s SAVE plan is not only benefitting millions of current borrowers but also providing the students of today and tomorrow with a more affordable pathway to college degrees and credentials.”
Starting in February of this year, the Department of Education states that borrowers eligible for forgiveness will be notified of the change in their balance due and that the federal agency will email borrowers not already enrolled in the SAVE plan that they are eligible for potential forgiveness as soon as they sign up.
Under the income-based SAVE plan, single borrowers who earn less than $32,800 annually or those in a family of four making less than $67,500 have a $0 payment as well as ensuring the borrower's balance will not grow due to unpaid interest as long as they make their monthly payments explain the Department of Education.
According to the Department of Education, almost 750,000 borrowers have been helped through changes made to the Public Service Loan Forgiveness program that began in October of 2021, in comparison, around 7,000 borrowers received forgiveness through these programs at the start of the Biden-Harris Administration.
More information about student loan repayment programs can be found here.