The Biden administration announced the automatic forgiveness of $1.2 billion in student loan debt for 153,000 borrowers, who will receive notification emails from President Biden.
Despite a Supreme Court ruling against widespread student loan forgiveness, the administration is addressing the $1.77 trillion student debt crisis, aiming to help over 40 million borrowers pay off up to $20,000 each.
Eligible borrowers, enrolled in the Saving on a Valuable Education (SAVE) repayment plan, must have completed at least ten years of payments and initially borrowed no more than $12,000 for their education. The Biden administration's income-driven repayment scheme aims to ease borrowers' financial burden, with 7.5 million borrowers currently enrolled, 4.3 million of whom have a monthly payment of zero dollars.
On Wednesday, the Biden administration announced that it will automatically forgive 153,000 debtors' $1.2 billion in student loan debt. According to the Department of Education, borrowers whose debt will be erased will get an email from President Joe Biden today notifying them of the forgiveness.
(Photo : by BRENDAN SMIALOWSKI/AFP via Getty Image)On Wednesday, the Biden administration announced that it will automatically forgive 153,000 debtors' $1.2 billion in student loan debt.
The Supreme Court struck down the Biden administration's plan for widespread student loan forgiveness last year, and the White House has since stepped up efforts to address the $1.77 trillion in student debt in the country. With the aid of that scheme, over 40 million debtors would have been able to pay off up to $20,000 in debt apiece.
The Biden administration claimed that it had granted loan relief for around 3.9 million debtors in this most recent round, many of whom have been making debt repayments for decades. The 153,000 debtors who have completed at least ten years of payments and are participating in the Saving on a Valuable Education (SAVE) repayment plan are eligible for the most recent debt forgiveness.
According to the Education Department, those who qualify have been a member of repayment schemes for ten years or more and initially borrowed no more than $12,000 for their education.
The administration also stated that a borrower may be eligible for forgiveness after an extra year of payments for each $1,000 borrowed beyond $12,000.
Biden will send an email today informing those who have been granted a debt discharge of their loan forgiveness; they don't need to do anything more. According to the announcement, borrowers will notice their debts forgiven in their accounts when servicers complete the forgiveness over the following several days.
The Biden administration developed the income-driven repayment scheme, or IDR, known as the SAVE plan. IDRs lessen borrowers' financial strain by tying their monthly payment to their income.
The SAVE plan was created to address a few issues with previous IDR systems, namely the ability for interest to accumulate on a borrower's loan.
After 20 or 25 years of repayment, all borrowers participating in SAVE are eligible for forgiveness; however, the White House has created a 10-year forgiveness term specifically for borrowers with lesser sums.
The Education Department said on Wednesday that there are 7.5 million borrowers registered in SAVE at this time. 4.3 million of those have a monthly payment of zero dollars.
