Earlier this week, the Biden-Harris Administration announced the approval of $7.7 billion in additional student loan debt relief for 160,500 borrowers. These discharges are for three categories of borrowers: those receiving Public Service Loan Forgiveness (PSLF), those who signed up for President Biden’s Saving on a Valuable Education (SAVE) Plan and who are eligible for its shortened time-to-forgiveness benefit, and those receiving forgiveness on income-driven repayment (IDR) because of fixes made by the Administration.
Following this announcment, the total loan forgiveness approved by the Biden-Harris Administration is now $167 billion for 4.75 million Americans. With efforts from President Biden and his Administration, providing debt relief to borrowers has been achievable as more than one out of every 10 federal student loan borrowers have now been approved for some debt relief.
“The Biden-Harris Administration remains persistent about our efforts to bring student debt relief to millions more across the country, and this announcement proves it,” says U.S. Secretary of Education Miguel Cardona. “One out of every 10 federal student loan borrowers approved for debt relief means one out of every 10 borrowers now has financial breathing room and a burden lifted.”
In addition to the recent approval for student debt relief, the U.S. Department of Education (Department) also announced an update on the timing of the payment count adjustment, which ensures borrowers get credit for the progress they [borrowers] have made towards IDR forgiveness and PSLF. Borrowers who would benefit from consolidating now have until June 30, 2024, to apply to consolidate, and can find out more information about the payment count adjustment here.
The debt relief announced today is broken down into the following categories:
• $5.2 billion for 66,900 borrowers through fixes to PSLF: The Administration has now approved $68 billion in forgiveness for more than 942,000 borrowers through PSLF.
• $613 million for 54,300 borrowers through the SAVE Plan: This relief will go to borrowers enrolled in the SAVE Plan who had smaller loans for their postsecondary studies. Borrowers can receive relief after at least 10 years of payments if they originally borrowed $12,000 or less. Each additional $1,000 in borrowing adds 12 more months until forgiveness. All borrowers on the SAVE Plan receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school. 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. Today’s announcement brings total relief approved under the SAVE Plan to $5.5 billion for 414,000 borrowers.
• $1.9 billion for 39,200 borrowers through administrative adjustments to IDR payment counts. These adjustments have brought borrowers closer to forgiveness and address longstanding concerns with the misuse of forbearance by loan servicers. Including today’s announcement, the Biden-Harris Administration has now approved $51.0 billion in IDR relief for more than 1 million borrowers.
According to a recent report by the Council of Economic Advisers, the relief provided by these discharges and other actions taken by the Administration could boost short-term consumption and have positive effects on borrower mental health, financial security, and outcomes such as homeownership and entrepreneurship.
In April, the Biden-Harris Administration released information of a new set of plans that would provide student debt relief for tens of millions of borrowers across the country. The new set of plans would bring the total number of borrowers eligible for student debt relief to over 30 million, including borrowers who have already been approved for debt cancellation by the Biden-Harris Administration over the past three years. The plans for new student debt relief regulations announced by President Biden are the next step in a regulatory process that began last summer to provide debt relief to as many borrowers as possible as quickly as possible under the Higher Education Act. The proposals would permit the following types of waivers:
• Waiving accrued and capitalized interest for millions of borrowers.
• Automatically discharging debt for borrowers not enrolled in but otherwise eligible for loan forgiveness under the SAVE Plan, closed school discharge, or other forgiveness programs.
• Eliminating student debt for borrowers who entered repayment 20 or more years ago.
• Helping borrowers who enrolled in low-financial-value programs or institutions.
• Assisting borrowers who experience hardship in paying.
With public comments regarding the first set of plans now being closed as of May 17, the Department is in the process of carefully reviewing comments and hopes to publish a final rule that results in delivering relief this fall.
“Another 160,000 borrowers and their families will get some much-needed relief thanks to the continued efforts the Biden-Harris Administration did to fix the broken student loan system,” says U.S. Under Secretary of Education James Kvaal. “We congratulate those borrowers on their due forgiveness, and we will continue to work to deliver relief to others.”
Beyond the relief under IDR, the SAVE Plan, and PSLF, the Biden-Harris Administration has also approved, $28.7 billion for more than 1.6 million borrowers who were cheated by their schools, saw their institutions precipitously close, or are covered by related court settlements, and $14.1 billion for more than 548,000 borrowers with a total and permanent disability.
The updated state-by-state breakdown of borrowers approved for forgiveness under IDR and the SAVE Plan, including today’s announcement, can be found here.
