Student loan illustration
MGN via U.S. Dept. of Education
(NEWSnet) – Just over 150,000 federal student loan borrowers are now eligible for a new option in student loan forgiveness efforts that is taking effect six months ahead of schedule.
Emails to affected individuals started to be sent Wednesday, the U.S. Department of Education said.
“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.
The education department explained Wednesday that nearly $1.2 billion in loans will be discharged for federal student loan borrowers who meet the following criteria:
- Enrolled in the SAVE plan, which is a newly introduced income-based repayment program and has resulted in low to no required payments for some.
- Have been in payment for at least 10 years.
- Originally borrowed $12,000 or less for college. This amount is based on the original principal balance of all federal loans borrowed for school, not the amount of an individual loan.
This step is in addition to other limited-scale efforts such as automatic discharges of federal loan balances related to Social Security disability status; and fixes to the existing Public Service Loan Forgiveness program as borrowers were meeting their required years of service in eligible jobs.
The education department is also working through the “rule making” process with intentions to allow for a range of hardship situations.
Biden’s earlier plan for an automatic $10,000 or $20,000 loan forgiveness for all federal student borrowers, based on a different law, was rejected by the Supreme Court.
In the meantime, the education department says those who believe they are eligible but have not yet signed up for the SAVE repayment program should do so at StudentAid.gov/save. The program is designed to help lower to middle-income borrowers with more affordable payments; and ability to pay will be recalculated under a new formula in July.
There are currently 7.5 million borrowers registered for the SAVE plan, of whom 4.3 million now have a $0 required monthly payment.
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