In a move aimed at providing relief, President Joe Biden announced plans to wipe out student loan debt for certain borrowers.
In Biden’s Friday announcement he shared that the cancellation of federal student loans will be for individuals who have taken out relatively small loans and have been in repayment for at least ten years. This decision, which will take effect in February, is expected to benefit borrowers who received less than $12,000 in federal loans and are enrolled in the new income-driven repayment plan called SAVE. The initiative is a significant step towards alleviating the financial strain faced by community college students, low-income borrowers, and those struggling to repay their loans.
In a tweet he said, “Imagine checking your student debt balance and seeing $0.00. Starting next month, many Americans enrolled in our SAVE plan will join the already 3.6 million who have seen their student debt cancelled by my Administration through various actions.” He said in another tweet, “I won’t stop fighting to give more borrowers breathing room, especially working- and middle-class families. Student debt relief through our SAVE plan will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans.”
President Biden proudly announced that the debt cancellation effort is being initiated nearly six months ahead of schedule. While 30 million borrowers are eligible for the SAVE plan, only 6.9 million are currently enrolled. The exact number of borrowers who will benefit from the cancellation initiative has yet to be determined. However, it is expected to positively impact a significant number of individuals who have diligently made loan repayments for the past decade.
The Importance of Income-Driven Repayment:
The SAVE plan, an income-driven repayment program, has been a focal point of the Biden administration’s efforts to alleviate the burden of student loan debt. By providing borrowers with lower monthly payments based on their income, this plan aims to make loan repayment more manageable and prevent borrowers from falling into financial hardship. The debt cancellation initiative further reinforces the administration’s commitment to supporting borrowers enrolled in the SAVE plan.
President Biden’s recent announcement follows previous attempts to address the issue of student loan debt. Last year, the Supreme Court rejected Biden’s pandemic-era debt relief plan, which aimed to erase up to $20,000 in student debt for approximately 43 million borrowers. However, shortly after loan repayments resumed in October, the President approved $9 billion in student loan debt forgiveness for 125,000 individuals. This included 53,000 beneficiaries of the Public Service Loan Forgiveness program.
In an official statement from the White House, Biden said, “I encourage all borrowers who may be eligible for early debt cancellation to sign up for the SAVE plan at studentaid.gov.”