This week there have been two big student debt relief announcements from the Biden Administration. Today, President Biden announced that 277,000 more people are having their federal student loan debt canceled. And Monday, President Biden announced plans for new debt relief rules that aim to provide some measure of debt relief to nearly 30 million Americans with student loans.
This article covers what borrowers need to know about today’s debt relief announcement. A second article, available here, covers what borrowers need to know about President Biden’s plans to expand debt relief to 30 million people.
President Biden Announces 277,000 More People Are Having Their Remaining Federal Student Loans Canceled
Today, President Biden announced that the Department of Education is canceling the remaining federal student loan balances for an additional 277,000 people. That brings the total number of people who have had federal student debt canceled during this administration to 4.3 million.
The debt relief announced today is the result of three different programs:
1. SAVE Plan: 206,800 borrowers are having their remaining loan balances canceled through the SAVE payment plan.
Under the SAVE plan, monthly payments are based on income and family size, and any remaining balance is forgiven after between 10 and 25 years of payments. Borrowers are eligible for cancellation in SAVE after 10 years of payments if they originally borrowed $12,000 or less for college. Each additional $1,000 in borrowing adds another year or repayment, up to a maximum of 20 years for people who only borrowed for undergraduate education, and 25 years for people who have loans for graduate school.
For borrowers enrolled in SAVE, cancellation is automatic once they meet their required amount of time in repayment. Since the SAVE plan was created last summer, nearly 8 million borrowers have enrolled and almost 360,000 borrowers have had their loans canceled.
How can you benefit? For more information about how you can enroll in and benefit from the SAVE plan, see here.
2. One-Time Payment Count Adjustment: 65,700 borrowers are having their remaining loan balances canceled through income-driven repayment programs (IDR) as a result of fixes to their payment counts through the one-time payment count adjustment.
This one-time account adjustment, which is going on right now, was adopted by the Biden Administration after investigations revealed that decades of loan servicing mistakes and system failures had prevented most borrowers from getting credit for all of their time in repayment—meaning borrowers were stuck in debt when they should have been eligible for loan forgiveness through an income-driven repayment program. Prior to these fixes, fewer than 100 borrowers actually received loan forgiveness through IDR, but today 996,000 borrowers have finally gotten this long-awaited relief.
How can you benefit? Most borrowers with Direct Loans will be automatically included in the one-time payment count adjustment without having to take any action. However, borrowers with older loan types, including commercially-held FFEL loans and Perkins loans, must consolidate their loans into the Direct Loan program by April 30, 2024 to be included in the payment count adjustment.
For more information about the one-time payment count adjustment and how to make sure you are included, see here.
3. Public Service Loan Forgiveness (PSLF): 4,600 borrowers are having their remaining loan balances canceled through the improved Public Service Loan Forgiveness (PSLF) program.
PSLF provides loan cancellation after 10 years of qualifying payments while working in public service for the government or a qualifying nonprofit. The program was long beset by problems that prevented people from benefiting, but recent changes by the Biden Administration have resulted in far more public service workers actually getting debt relief through the program. Over 875,000 borrowers have now gotten debt relief through PSLF.
How can you benefit? For more information about PSLF, and how to apply, see here.
Did you receive debt relief through any of these programs? If so, we’d love to hear from you. Please consider sharing your story with NCLC to help us make the student loan system better for borrowers.