Biden Accelerates Student Loan Forgiveness for Some Borrowers
Credit: Image Credit: Caroline Gutman / The Washington Post / Getty Images- Borrowers enrolled in the new SAVE income-driven repayment plan may see their remaining debt erased.
- This debt relief, however, only applies to those who have made payments on their loans for at least 10 years.
- Time spent in the COVID-19 payment pause counts toward the timeline to forgiveness.
- The Biden administration previously didn’t plan to start wiping remaining debts until July.
Enrollees in the new Saving on a Valuable Education (SAVE) student loan repayment plan could qualify for total debt forgiveness as soon as next month.
President Joe Biden announced Thursday that his administration will accelerate the forgiveness timeline for those who borrowed $12,000 or less in federal student loans. Through the SAVE plan, they could qualify for forgiveness after 10 years of repayment rather than the typical 20-year timeline.
His administration originally planned to begin instituting this aspect of the SAVE plan in July but will now start erasing debt in February.
It is unclear, however, how many borrowers could benefit from this move.
Biden’s SAVE plan is the most generous of all the currently available income-driven repayment (IDR) plans. It offers the lowest monthly payments for most borrowers, and all federal student loan borrowers can qualify for total forgiveness after 20 years of repayment.
Those who borrowed $12,000 or less to attend college qualify for forgiveness after just 10 years of repayment. The Biden administration anticipates this will be especially helpful for those who only attended community college.
While the SAVE plan has only been available for less than a year, the Department of Education (ED) said 700,000 borrowers switched into the SAVE plan from another IDR plan as of January 2024. These borrowers previously wouldn’t have qualified for debt forgiveness until at least 20 years of repayment. But if they’ve been enrolled in any IDR plan for at least 10 years, they could see their debt erased as soon as February.
Time spent under the COVID-19 payment pause counts toward this 10-year timeline to forgiveness.
“Our ability to deliver this relief to borrowers months ahead of schedule is a testament to the Biden administration’s commitment to delivering relief to as many borrowers as possible, as quickly as possible,” ED Secretary Miguel Cardona said in a statement. “Today’s announcement gives borrowers an even greater reason to check out the SAVE plan and find out if they may qualify for earlier debt relief.”
For every $1,000 borrowed above $12,000, a borrower must add one year to the timeline to forgiveness. Someone who borrowed $13,000 to attend college, for example, can qualify for forgiveness if they’ve been in repayment for 11 years.
Not everyone was a fan of Biden’s announcement.
U.S. Rep. Virginia Foxx, a Republican representing North Carolina and chairwoman of the House Education and the Workforce Committee, said the SAVE plan may lead to higher college costs and steer borrowers toward bankruptcy.
“President Biden is downright desperate to buy votes before the election — so much so that he greenlights [ED] to dump even more kerosene on an already raging student debt fire,” she said in a statement. “It would surprise no one if the department relied on infants playing with abacuses to balance its books — it is a complete and utter disaster.”
She has also chastised the program’s price tag in the past.
Biden’s administration is currently crafting a new widespread debt relief plan through the negotiated rulemaking process. This comes after the U.S. Supreme Court struck down his previous forgiveness plan in June 2023.
His Plan B attempt promises to be a more targeted relief program.