A total of $1.2 billion in federal student loan debt will be automatically discharged for 153,000 borrowers enrolled in President Joe Biden’s “most generous ever” repayment plan, the Department of Education stated on Feb. 21.
To be eligible for the latest round of student loan debt cancellation, the borrowers must be enrolled in the new income-driven repayment (IDR) plan, dubbed SAVE; have been making repayments for at least 10 years; and have originally taken out $12,000 or less for college.
For every $1,000 borrowed above $12,000, a borrower can receive debt discharge after an additional year of repayments. For example, those who had an original principal balance of $13,000 can now have their remaining balance wiped out if they’ve been in repayment for 11 years.
All borrowers on SAVE receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.
“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,” Secretary of Education Miguel Cardona said in a statement, pledging that the “historic fight to cancel student debt isn’t over yet.”
The announcement comes as the Biden administration pushes for a second attempt at large-scale federal student loan debt cancellation after the Supreme Court torpedoed his initial $400 billion plan last summer. After the court’s conservative majority ruled that he overstepped his authority, President Biden tasked the Education Department with crafting a new plan on a more solid legal basis, which, in turn, requires a more lengthy and complicated process called “negotiated rulemaking.”
According to the Education Department, it has so far canceled more than $138 billion in federal student loan debt owed by more than 3.9 million borrowers. That includes $45.6 billion for 930,500 borrowers who are on an IDR plan, $56.7 billion for 793,000 borrowers who work in the public sector, $11.7 billion for 513,000 borrowers with a permanent disability, and $22.5 billion for 1.3 million borrowers who said they have been misled or defrauded by their schools.
By Bill Pan
