By Kaanita Iyer and Katie Lobosco, CNN
(CNN) — The White House announced Friday that some student loan borrowers enrolled in President Joe Biden’s SAVE plan may see their remaining balance wiped away starting next month.
The forgiveness, originally scheduled to go into effect in July, comes ahead of schedule and applies to borrowers with a federal student loan balance of $12,000 or less who have been making payments for at least 10 years.
“This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans,” 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.”
The Saving on a Valuable Education plan was launched last summer after the Supreme Court struck down Biden’s one-time student loan forgiveness program aimed at delivering up to $20,000 of relief to millions of borrowers.
Unlike the proposed program, SAVE is a repayment plan that provide benefits for both current and future borrowers who sign up for it. Nearly 7 million borrowers have signed up for the plan, according to the White House.
The forgiveness provision is among the most dramatic benefits of the plan as it will allow borrowers who have made payments for at least 10 years to qualify for forgiveness, while other income-driven repayment plans – which base payments on borrower’s income and family size – usually require a borrower to pay for at least 20 years before seeing any debt cancellation.
The SAVE plan also offers generous terms for low-income borrowers by lowering the qualifying threshold for $0 monthly payments compared with other income-driven repayment plans. Nearly 4 million borrowers have a $0 monthly payment, the White House said Friday.
Another provision of the plan that could cut some borrowers’ payments in half is scheduled to take effect in July. Payments on loans borrowed for undergraduate school will be reduced from 10% to 5% of discretionary income, while payments on loans borrowed for both undergraduate and graduate school will be between 5% and 10% of the borrower’s income based upon the original principal balances of their loans.
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