The Education Department is canceling $1.2 billion in federal student loan debt for 150,000 borrowers – the latest in a string of cancellation notices that brings total debt erasure under the Biden administration to $138 billion for 3.9 million borrowers.
“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,” Education Secretary Miguel Cardona said in a statement. “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.”
Borrowers will be notified starting Wednesday that they’ve been approved for the cancellation, and no action is needed on their part to erase the debt.
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For a borrower to be eligible, they must be enrolled in the administration’s new Saving on a Valuable Education, or SAVE Plan, have been making payments for at least 10 years, and have originally borrowed $12,000 or less for college.
For every $1,000 borrowed above $12,000, a borrower can receive debt cancellation after an additional year of payments. Additionally, all borrowers enrolled in the SAVE program receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.
Those who qualify were set to receive an email from Biden underscoring his commitment to tackling the issue.
“I hope this relief gives you a little more breathing room,” the letter reads in part. “I’ve heard from countless people who have told me that relieving the burden of their student loan debt will allow them to support themselves and their families, buy their first home, start a small business, and move forward with life plans they’ve put on hold.”
The administration announced last month that it would fast-track the loan cancellation, which was originally set for July.
According to a financial analysis by the Education Department, the new plan is already having the intended effect – to free up capital among those with the most crushing debts.
As of Feb. 20, 7.5 million borrowers were enrolled in the SAVE plan – 4.3 million of whom have zero-dollar scheduled payments based on their income levels. The analysis also shows that borrowers enrolled in the repayment plan who are currently making non-zero payments are saving on average $117 per month or over $1,400 per year.
Despite the Supreme Court’s block of the president’s sweeping student loan cancellation plan last summer, providing debt relief to borrowers has been one of the administration’s biggest policy wins during Biden’s first term – and one the Biden-Harris campaign is prepared to tout heading into the 2024 presidential election.
The administration is continuing to pursue new ways to cancel even more debt for students most affected by it, including through an ongoing regulatory process that could pave the way to wide-scale debt cancellation for certain buckets of borrowers, including for borrowers whose balances are greater than what they originally borrowed, borrowers whose loans first entered repayment decades ago, and borrowers who attended programs that did not provide sufficient financial value.
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