With the November presidential election just nine months away, the Joe Biden administration has approved $1.2 billion in additional student debt forgiveness.
According to the Department of Education, “The Biden-Harris Administration announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 borrowers who are eligible for the shortened time to forgiveness benefit under President Biden’s Saving on a Valuable Education (SAVE) Plan.”
Students with small student loans will benefit from the Biden administration’s new income-based repayment program, the Saving on a Valuable Education (SAVE) Plan, after the Supreme Court ruled the Biden administration’s original student loan forgiveness plan unconstitutional.
For a borrower to be eligible for this forgiveness, they must be enrolled in the SAVE Plan, have been making at least 10 years of payments, and have originally taken out $12,000 or less for college. For every additional $1,000 in debt, the forgiveness period will increase by one year. For example, a student who borrowed $13,000 and has been paying it back for 10 years will have their debt forgiven next year, while a student who borrowed $14,000 will have their debt forgiven in two years.
The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan. The Biden administration’s new plan is expected to help borrowers with low incomes or who attended community colleges, which are often less expensive.
While the Department of Education had originally planned to begin student debt forgiveness under SAVE in July, it is moving up the forgiveness for small student loan borrowers by about five months. There are currently about 7.5 million borrowers enrolled in the SAVE plan, according to the Department of Education.
“The Biden administration’s acceleration of student loan forgiveness in the run-up to the presidential election appears to be aimed at appealing to younger, lower-middle-class voters,” said some observers.
In total, the Biden administration has granted about 3.9 million student loan borrowers $138 billion in student loan forgiveness so far.
BY JIHYE YOON, JUNHAN PARK [yoon.jihye@koreadailyny.com]
