The Biden administration announced Friday morning that it is expanding and accelerating its income-driven student loan forgiveness plan.
Borrowers who originally took out loans of $12,000 or less and have made at least 10 years of payments will be eligible for debt cancellation as early as next month under the Saving on a Valuable Education Plan.
“Beyond being the most affordable student loan repayment plan ever available, the Biden-Harris Administration designed the SAVE Plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before,” Education Secretary Miguel Cardona said in a press release. “With lower monthly payments, protection from runaway interest, and faster timelines to debt forgiveness, President Biden’s SAVE plan is not only benefitting millions of current borrowers but also providing the students of today and tomorrow with a more affordable pathway to college degrees and credentials.”
The Biden administration noted that the new benefit under the SAVE Plan is being rolled out months prior to its original start date, which was July 1.
In addition to the $12,000, 10-year payment limit for immediate cancellation, the plan allows borrowers to receive the benefit after one year of additional payments per $1,000 above $12,000 borrowed.
Therefore, someone who borrowed $13,000 would have to make a minimum of 11 years of payments before getting the remainder of his or her debt erased. The offer is based on the original principal of the loan, not current debt.
The Department of Education added that it believes the plan will make 85% of community college borrowers “debt-free within 10 years.”
Department Undersecretary James Kvaal told reporters on a Thursday afternoon call that the group of relatively low-debt borrowers also includes a significant portion of students who left college without obtaining a degree.
The agency also announced an outreach program to accompany the rollout in which the Education Department will start emailing borrowers to encourage them to sign up for the program. It also plans to work with third parties to boost enrollment in the plan. Borrowers who are already using the program and meet the eligibility requirements will automatically see their loans discharged.
As of today, the department noted, SAVE has 6.9 million borrowers enrolled, but a senior department official said it expects to have numbers on the new beneficiaries in the coming weeks.
“This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans,” President Joe Biden said in a statement. “And it’s part of our ongoing efforts to act as quickly as possible to give more borrowers breathing room so they can get out from under the burden of student loan debt, move on with their lives, and pursue their dreams.”
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
The SAVE Plan replaced the original Revised Pay As You Earn plan in August, but the income-driven schemes only came after the Supreme Court struck down the original debt cancellation plan, which attempted to kill $400 billion in student loans in one fell swoop.
The new plans are seen by critics of the Biden administration as a workaround to the high court ruling that simply piles student loan payments onto taxpayers, many of whom decided not to attend college.
