Biden's New Plan Wipes Out Student Debt for 150K+

Significant financial relief arrives for numerous student borrowers

by Zain ul Abedin
Biden's New Plan Wipes Out Student Debt for 150K+
© Chip Somodevilla/Getty Images

In a groundbreaking move, the Biden administration announced on Wednesday the cancellation of $1.2 billion in student loans, bringing financial relief to approximately 153,000 borrowers. This decisive action targets individuals who have been diligently repaying modest loan amounts for a decade or more.

The criteria for qualification under this new wave of debt forgiveness are specific: eligible borrowers must be part of the administration's Saving on a Valuable Education (SAVE) repayment plan. Moreover, they must have been making consistent payments for at least ten years and have initially borrowed $12,000 or less for their college education.

The White House released a detailed fact sheet outlining the plan, emphasizing that for every additional $1,000 borrowed over the $12,000 threshold, a borrower qualifies for forgiveness after an extra year of payments. For instance, as highlighted in the White House's example, a borrower who obtained $14,000 or less in federal loans for an associate’s degree in biotechnology and has been repaying for 12 years under the SAVE plan, is now eligible for complete debt relief.

These beneficiaries will soon receive an email from President Joe Biden, which is expected to read, "I hope this relief gives you a little more breathing room." The President's message reflects his understanding of the profound impact student loan debt has on American lives, hindering milestones such as home ownership, business start-ups, and family support.

Accelerated Debt Relief

Initially scheduled for July, this relief has been expedited by about six months. Education Secretary Miguel Cardona, in a press briefing, underscored the automatic nature of this forgiveness. This move brings the total student debt cancelled under the Biden administration to an astonishing nearly $138 billion, impacting close to 3.9 million borrowers.

Secretary Cardona emphasized the historic significance of these efforts, stating, "We’re providing real, immediate breathing room on an unacceptable reality where student loan payments compete with basic needs, like putting food on the table and accessing health care." Further expanding the reach of this initiative, the Department of Education plans to proactively contact other eligible borrowers not currently enrolled in the SAVE plan.

This outreach is part of a broader commitment to address the student debt crisis, following the Supreme Court's rejection of Biden’s original student debt relief program. That program sought to cancel up to $20,000 in debt for roughly 43 million borrowers.

With current enrollment in the SAVE plan at 6.9 million and eligibility extending to 30 million individuals, this development marks a significant stride towards easing the financial burden of education for millions of Americans.