President Joe Biden has announced the automatic cancellation of federal student loans for nearly 153,000 borrowers as part of a new repayment plan.
The cancellation program, called the SAVE plan, will forgive loans totaling $1.2 billion.
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Driving the news: Borrowers who have enrolled in the SAVE student loan repayment plan, made 10 years of payments, and borrowed $12,000 or less will have their debt canceled.
- Notifications regarding loan forgiveness were sent to eligible borrowers via email.
- The eligibility criteria for loan cancellation include enrollment in the SAVE plan, borrowing $12,000 or less for college, and making at least 10 years of payments.
- Borrowers who borrowed more than $12,000 will be eligible for cancellation but on a longer timeline, with an additional year of payments for every $1,000 borrowed beyond $12,000.
The big picture: The maximum repayment period is capped at 20 years for undergraduate loans and 25 years for graduate school loans.
- President Biden’s repayment plan was announced last year and includes a separate proposal to cancel up to $20,000 in loans for millions of Americans.
- Unlike the widespread loan forgiveness plan, which was struck down by the Supreme Court, the repayment plan is built upon existing income-based plans created by Congress over a decade ago.
- Over 7.5 million people have enrolled in the new repayment plan.
What they’re saying: “Starting today, the first round of folks who are enrolled in our SAVE student loan repayment plan who have paid their loans for 10 years and borrowed $12,000 or less will have their debt cancelled,” Biden said on X. “That’s 150,000 Americans and counting. And we’re pushing to relieve more.”
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