In its latest move, the Education Department has approved the cancellation of $1.2 billion in federal student loan debt for 150,000 borrowers. This action adds to the series of debt erasures under the Biden administration, totaling $138 billion for 3.9 million borrowers.
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Student Loan Debt
Education Secretary Miguel Cardona emphasized the administration’s commitment to providing relief, stating, “If you’ve been paying for a decade, you’ve done your part, and you deserve relief.” Borrowers meeting certain criteria, including enrollment in the new Saving on a Valuable Education (SAVE) Plan and having made payments for at least 10 years, will receive notification of debt cancellation without needing to take further action.
Under the SAVE Plan, borrowers who initially borrowed $12,000 or less for college are eligible for debt cancellation. For every additional $1,000 borrowed above this threshold, borrowers can receive cancellation after an extra year of payments. Additionally, all borrowers enrolled in the SAVE program receive forgiveness after 20 or 25 years, depending on whether they have graduate school loans.
The Biden administration aims to alleviate financial burdens for those with the most pressing debts, as evidenced by the financial analysis showing significant savings for borrowers enrolled in the repayment plan. While the Supreme Court blocked the president’s broader student loan cancellation plan last summer, debt relief remains a significant policy achievement for the administration, poised to be highlighted in the upcoming presidential election. Additionally, ongoing regulatory efforts seek to explore further debt cancellation avenues for borrowers most affected by student loans.
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