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Here's everything you need to know about Friday’s student loan forgiveness bonanza
On Friday, President Joe Biden’s administration announced its latest student debt relief effort, authorizing $7.4 billion in student loan debt forgiveness for 277,000 borrowers.
This latest round of debt forgiveness takes place under Biden’s Saving on a Valuable Education (SAVE) program, which ties monthly student loan payments and debt forgiveness to income and family size.
The president had initially floated forgiving $10,000 in student loan debt for most federal borrowers but was forced to pivot to more indirect action after backlash from Republicans, who continue to attempt to undermine the administration’s efforts. The SAVE program is the Biden administration’s answer to a 2023 Supreme Court decision that killed its first attempt to forgive loans — either partially or completely — for 43 million Americans.
“Today’s announcement brings the total loan forgiveness approved by the Biden-Harris Administration to $153 billion for nearly 4.3 million Americans,” the Department of Education wrote in a statement Friday.
“The Biden-Harris Administration is not letting up its efforts to give hardworking Americans some breathing room,” said Education Secretary Miguel Cardona. “As long as there are people with overwhelming student loan debt competing with basic needs such as food and health care, we will remain relentless in our pursuit to bring relief to millions across the country.”
So if you have a pesky student loan payment burning a monthly hole in your bank account, here’s everything you know about Friday’s debt forgiveness announcement.
Who gets what?
The Department of Education said in its Friday announcement that this round of loan forgiveness is broken down into three categories.
- $3.6 billion for nearly 206,800 borrowers through SAVE.
- $3.5 billion for 65,800 borrowers through administrative adjustments to Income-Driven Repaymentplans.
- $300 million for 4,600 borrowers through fixes to the Public Service Loan Forgiveness program.
If I’m already in one of these programs, how do I know if my debt has been affected?
Check your inbox! The Biden administration said it would begin notifying those enrolled in the plan whose debt has been forgiven or reduced via email on Friday. The process may take a few weeks to get to you, so don’t be disappointed if you haven’t gotten anything yet.Editor’s picks
I’m not enrolled in any of these. What do I do?
If you’re not enrolled — but think you may qualify — the good news is applications are still open for all three. The Biden administration has been announcing new waves of loan forgiveness on a semi-regular basis, so get yourself signed up as soon as you can if you want to avoid missing out on any more announcements. We’ll explain the basics of each program next.
Who qualifies for SAVE?
Borrowers enrolled in SAVE “can receive relief after at least 10 years of payments if they originally borrowed $12,000 or less for college,” and ever “additional $1,000 in borrowing adds 12 more months until forgiveness.”
If you’re enrolled in SAVE, and have been paying off loans for 20 or 25 years (depending on whether you have loans for graduate school) you may qualify for automatic forgiveness.Related
One important note: The requirements are based on your original loan amount, not your existing balance.
You can apply for the program here.
What’s the deal with income-driven repayment?
This is part of a push by the Biden administration to address the “misuse of forbearance by loan servicers.” While it may not outright clear a loan, it can reduce the amount owed and make payments more manageable by basing them on your income and the size of your household.
Learn more and apply here.
What is Public Service Loan Forgiveness?
Individuals whose first job post-graduation was in government, or at a qualifying not-for-profit organization, may be eligible for student loan forgiveness after making the equivalent of 120 qualifying monthly payments to a repayment plan accepted by the program.
Learn more and check if you qualify here.
I’ve heard student loan forgiveness may not be legal. Is that true?
Two coalitions of Republican states have filed lawsuits challenging the legality of the SAVE program.
“Yet again, the President is unilaterally trying to impose an extraordinarily expensive and controversial policy that he could not get through Congress,” says one lawsuit filed Tuesday by attorneys general in Arkansas, Florida, Georgia, Missouri, North Dakota, Ohio, and Oklahoma. The suit argues that Biden is overstepping his constitutional authority.
The Department of Education has countered that “Congress gave the U.S. Department of Education the authority to define the terms of income-driven repayment plans in 1993, and the SAVE plan is the fourth time the Department has used that authority.”Trending
What’s next in Biden’s plan?
On Monday, the Biden administration unveiled a new set of plans for its student loan forgiveness platform. These include:
- Waiving accrued and capitalized interest for millions of borrowers who now owe more than they originally borrowed.
- Automatically discharging debt for borrowers otherwise eligible for loan forgiveness under SAVE — and other programs — who are not yet enrolled.
- Eliminating student debt for borrowers who entered repayment 20 or more years ago.
- Helping borrowers who enrolled in low-financial-value programs or institutions at colleges “that lost their eligibility to participate in the federal student aid program or were denied recertification because they cheated or took advantage of students.” This would also help students whose post-college job prospects had “earnings no better than what someone with a high school diploma earns.”
- Assisting borrowers who experience hardship in paying back their loans.
