The Biden administration announced Thursday that it will fast-track a change in student loan debt that erases the debts of thousands of federal student loan borrowers – undergraduate as well as graduate students who initially borrowed less than $21,000.
According to the Department of Education, anyone who borrowed $12,000 or less in federal student loans and has been in repayment for at least 10 years will have their debts automatically erased in February.
The program was to go into effect in July.
Borrowers must enroll in the Biden administration’s new income-based repayment plan known as SAVE. It does not matter what repayment plan they were in before, DOE officials said, the debt will be erased as long as they were actively repaying their loans and are now enrolled in SAVE.
The DOE says the program will consider the amount students initially borrowed – not the amount they currently owe.
“I am proud that my Administration is implementing one of the most impactful provisions of the SAVE plan nearly six months ahead of schedule,” said President Biden in a Friday 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,” Education Secretary Miguel Cardona said in a press release.
Education Under Secretary James Kvaal told reporters in a call that this move will help a particularly vulnerable group of federal student loan borrowers.
“This group has low incomes. About three-quarters of them receive Pell Grants. About one-third of them first attended a community college,” Kvaal told reporters. Perhaps most importantly, “more than 3 in 5 borrowers with defaulted loans originally borrowed less than $12,000.”
Beginning in February, borrowers enrolled in SAVE will be notified if their debts qualify for cancellation, with no further action required by the borrower.
As of early January, 6.9 million borrowers have enrolled in SAVE.
Some Republicans disagreed with the plan announced Friday.
“President Biden is downright desperate to buy votes before the election – so much so that he greenlights the Department of Education to dump even more kerosene on an already raging student debt fire,” said the Republican chair of the House Education Committee, Virginia Foxx of North Carolina, after Friday’s announcement. “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.”
© 2024 Cox Media Group
