Catherine Rusoff
The White House on Wednesday he said approved $7.7 billion in student debt cancellation for 160,500 borrowers, part of its ongoing effort to provide relief after the Supreme Court last year blocked President Joe Biden’s plan for broad college loan forgiveness.
With the latest round of forgiveness, the government eliminated a total of $167 billion in student loans for 4.75 million people, or about 1 in 10 student loan borrowers, the Department of Education said.
People who qualify for forgiveness in the latest round of debt cancellation include public workers such as teachers and police officers, as well as tens of thousands of people who signed up for Biden’s program. new loan repayment program, called SAVE. This program, created last year, ties a borrower’s monthly payment to their income, reducing their financial payments, and is designed to correct a pitfall of previous repayment programs that allowed interest to snowball.
“One in 10 federal student loan borrowers approved for debt relief means one in 10 borrowers now has financial breathing room and a burden lifted,” U.S. Education Secretary Miguel Cardona said in the release.
Here’s what you should know about the latest round of forgiveness.
Who Qualifies for Loan Forgiveness?
The Biden administration has said there are three groups of borrowers that were approved for forgiveness in the latest round.
- 66,900 borrowers will have $5.2 billion forgiven through the Public Service Loan Forgiveness program, which is designed to help public employees such as teachers, nurses and police officers cancel their debts after 10 years of repayment.
- 54,300 borrowers will have $613 million forgiven through the SAVE plan.
- Another 39,200 borrowers will have $1.9 billion forgiven through adjustments to their income-based repayment plans. These plans were sometimes poorly managed by credit managers, which made it more difficult for some borrowers to obtain forgiveness.
How will I know if I qualify for forgiveness?
The Biden administration said people who qualify in this latest round of debt cancellation will receive an email about their approval.
Debt cancellation will then be processed in the coming weeks, he added.
Does Biden plan to offer more student loan forgiveness?
Yes, because the Biden administration is working on a new effort to provide broad loan forgiveness through the Higher Education Law.
The new plan could provide relief to about 30 million borrowers by eliminating some or all of their college loans.
The Biden administration said Wednesday that the public comment period on the new regulation ended May 17, with the Department of Education now reviewing the thousands of comments it received.
“Our goal is to publish a final rule that results in the delivery of aid this fall,” the Department of Education said in Wednesday’s statement.
How can borrowers enroll in SAVE?
The SAVE plan is open for registration here.
The income-driven repayment plan bases monthly payments on income and family size, with some lower-income families with more family members paying little or nothing each month. For example, a family of four with less than $50,000 in annual income would have monthly payments of $0.
Another benefit of the program is that it eliminates growing interest. Under previous plans, borrowers sometimes saw their balances grow if their monthly payments didn’t cover all of their interest, a financial situation called “negative amortization.” That’s why some borrowers may have left college with, say, $20,000 in debt, but ended up with much larger balances even after years of repayment.
