Some Florida residents may see the student debt that’s been hanging over their heads just… vanish. On Wednesday the Education Department announced that $1.2 billion in discharged debt for more than 150,000 borrowers across the country has been approved.
Students enrolled in President Joe Biden’s new income-driven repayment plan, Saving on a Valuable Education, could see their debt erased immediately if they meet certain conditions. For people in a state with the third-highest federal student loan debt in the country, this act could be a huge load off their minds.
“From day one of my Administration, I vowed to fix student loan programs so higher education can be a ticket to the middle class – not a barrier to opportunity.” Biden wrote in an email set to go out to eligible borrowers. “I hope this relief gives you a little more breathing room.”
The debt forgiveness was initially planned for July but last month the agency announced the timetable was moving up. Biden has been attempting different methods of student debt relief only to see them challenged by Republicans and blocked by the Supreme Court.
Here’s what you need to know.
Do I qualify to have my student debt erased in Biden’s plan?
Your debts will be canceled this month if:
- You are enrolled in SAVE
- You originally took out $12,000 or less in undergraduate or graduate federal student loans
- You’ve been repaying them for at least 10 years
You don’t have to do a thing to request debt forgiveness, according to the Department of Education. If you qualify, you should have received an email notification. The DOE also will begin emailing people who are not on SAVE but could receive forgiveness as soon as they sign up.
What if I borrowed more than $12,000 in my student loans?
For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments.
That means a borrower who originally borrowed less than $21,000 will be eligible for forgiveness faster than the 20-year timeline for undergraduate borrowers on SAVE, the DOE said. The benefit is based upon the original principal balance of all federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan.
Periods that count toward the forgiveness benefits include months during the payment pause and time in repayment as determined through the payment count adjustment.
How many people will get their student loan debts canceled?
There are currently 7.5 million people enrolled in SAVE and the DOE is launching an outreach and email campaign to encourage more borrowers to sign up and take advantage of the shortened repayment period, as well as the other benefits of the program. As of early January, there were 475,800 people in Florida enrolled in SAVE, the DOE said.
The biggest beneficiaries of the debt cancellation plan will be community college students, the DOE said, as they typically borrow smaller amounts.
“With today’s announcement, we are once again sending a clear message to borrowers who had low balances: if you’ve been paying for a decade, you’ve done your part, and you deserve relief,” said U.S. Secretary of Education Miguel Cardona. “Under President Biden’s leadership, our Administration has now approved loan forgiveness for nearly 3.9 million borrowers, and our historic fight to cancel student debt isn’t over yet.”
What is the SAVE Plan?
The Saving on a Valuable Education (SAVE) Plan is an income-driven student loan repayment plan that bases monthly payment amounts on your adjusted gross income and your family size, with immediate benefits to borrowers:
- Borrowers who make less than $15 an hour don’t have to make payments at all until their income improves, with no increase in interest
- Borrowers earning more than $15 an hour can still save more than $1,000 a year compared with other income-based repayment plans, the DOE said
- If you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month.
Which loans are eligible for the SAVE Plan?
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
Some other federal loans are eligible if they are consolidated into a Direct Consolidation Loan.
How much do Floridians owe in federal student debt?
According to the U.S. Department of Education’s Federal Student Aid site, as of Sept. 30, 2023, the total federal student loan debt balance in Florida was $103.3 billion, including outstanding principal and interest balances, for 2.7 million borrowers. This includes Direct Loans, Federal Family Education Loans (FFEL) and Perkins Loans but does not include private loan debt. That’s also down from the $105.4 billion it was just months previously.
That puts Florida students at the third highest amount of federal student loan debt, behind California ($146.7 billion) and Texas ($112.7 billion). More than 1.4 million Floridians are carrying up to $20,000 in debt, and 1.3 million owe more than $20,000. Nearly 230,000 Floridians owe more than $100,000.
The average federal student loan for Florida borrowers was $38,065, as of Sept. 30, 2023. That was the fourth highest in the U.S., after Washington, D.C. ($53,782), Maryland ($42,280), Georgia ($40,804), and Virginia ($39,899). The average federal student debt in the U.S. was $35,099.
According to Forbes, the average student debt in the U.S. for 2024, including federal and private loans, was $28,950.
How much student debt has the Biden Administration forgiven?
According to a release, the government under Biden has approved nearly $138 billion in targeted relief for more than 3.9 million borrowers, including:
- $45.6 billion for 930,500 borrowers through improvements to income-driven repayment
- $56.7 billion for more than 793,000 borrowers through fixes to Public Service Loan Forgiveness that began in October 2021
- $11.7 billion for 513,000 borrowers with a total and permanent disability
- $22.5 billion for 1.3 million borrowers through closed school discharges, borrower defense, and related court settlements
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