New debt cancellation for borrowers enrolled in SAVE, other Income-Driven Repayment plans, and Public Service Loan Forgiveness comes on the heels of President Biden announcing new plans that could benefit tens of millions of Americans.This latest round of debt cancellation means that $153 billion in student debt relief has been provided for 4.3 million Americans. New plans announced by Biden would cancel student debt for over 30 million when implemented.These state-by-state fact sheets have been provided by the White House:
President Biden announced that 277,000 more Americans will get their student debt canceled, bringing the total debt relief approved by the Biden-Harris Administration to $153 billion for 4.3 million Americans through various actions. This latest round of debt cancellation comes on the heels of President Biden announcing new plans that, if implemented, would cancel student debt for over 30 million Americans when combined with actions the Administration has taken over the last three years. These announcements reinforce the President’s commitment to using every path available to deliver student debt relief to as many borrowers as possible through various actions.
The 277,000 Americans receiving this latest round of debt relief are borrowers enrolled in the SAVE Plan, other borrowers enrolled in Income-Driven Repayment plans, and borrowers receiving Public Service Loan Forgiveness. The Biden-Harris Administration fixed Income-Driven Repayment (IDR) and launched the SAVE Plan last year – the most affordable repayment plan ever. Already 8 million borrowers are enrolled in SAVE, 4.5 million of those borrowers have a monthly payment of $0, and over 1 million additional borrowers have a monthly payment of less than $100. And if borrowers took out low balances of loans, the SAVE Plan puts them on a faster path to debt relief after at least ten years of payments.
Since President Biden took office, his Administration has approved over $54 billion in debt cancellation for 1.3 million borrowers enrolled in income-driven repayment plans, including the new SAVE Plan. This builds on additional actions the Biden-Harris Administration has taken to cancel debt for nearly 900,000 public service workers, 1.3 million borrowers cheated by their schools or borrowers covered by related court settlements, and nearly 550,000 borrowers with a total and permanent disability, including many veterans.
While the Administration continues to cancel Americans’ student debt through improving existing forgiveness programs and through the SAVE Plan, the Biden-Harris Administration is also pursuing new plans that, if implemented, would cancel student debt for tens of millions more. Earlier this week, the President announced his Administration’s alternative path to debt cancellation in the wake of last year’s Supreme Court decision. Learn more about these plans at StudentAid.gov/DebtRelief.
This fact sheet provided by the White House documents the latest efforts by the Biden Administration to relieve the burden of student debt. It is the latest in more than 25 actions that have resulted in $138 billion in student debt cancellation for almost 3.9 million borrowers.
“From Day 1, the President vowed to fix the broken loan system and make sure education was a pathway to the middle class, not a barrier,” a White House spokesperson stated. “ He has cancelled more student debt than any president – $138 billion for 3.9 million – fixing public service loan forgiveness, affecting 800,000 nurses, firefighters, teachers and others. Before, only 7,000 got relief. He has held colleges accountable for defrauding borrowers who paid over 20 years but never got the relief they were entitled to. The President’s actions have allowed over 4 million to afford homes, businesses, pursue the dreams they had to put on hold because of student loan, but are no longer weighed down by burden of student debt.” – Karen Rubin/news-photos-features.com
Today, President Biden announced the approval of $1.2 billion in student debt cancellation for almost 153,000 borrowers currently enrolled in the Saving on a Valuable Education (SAVE) repayment plan. The Biden-Harris Administration has now approved nearly $138 billion in student debt cancellation for almost 3.9 million borrowers through more than two dozen executive actions. The borrowers receiving relief are the first to benefit from a SAVE plan policy that provides debt forgiveness to borrowers who have been in repayment after as little as 10 years and took out $12,000 or less in student loans. Originally planned for July, the Biden-Harris Administration implemented this provision of SAVE and is providing relief to borrowers nearly six months ahead of schedule.
From Day One of his Administration, President Biden vowed to fix the student loan system and make sure higher education is a pathway to the middle class – not a barrier to opportunity. Already, the President has cancelled more student debt than any President in history – delivering life-changing relief to students and families – and has created the most affordable student loan repayment plan ever: the SAVE plan. While Republicans in Congress and their allies try to block President Biden every step of the way, the Biden-Harris Administration continues to cancel student debt for millions of borrowers, and is leaving no stone unturned in the fight to give more borrowers breathing room on their student loans.
Thanks to the Biden-Harris Administration’s SAVE plan, starting today, the Administration will be cancelling debt for borrowers who are enrolled in the SAVE plan, have been in repayment for at least 10 years and took out $12,000 or less in loans for college. For every additional $1,000 a borrower initially borrowed, they will receive relief after an additional year of payments. For example, a borrower enrolled in SAVE who took out $14,000 or less in federal loans to earn an associate’s degree in biotechnology would receive full debt relief starting this week if they have been in repayment for 12 years. The U.S. Department of Education (Department) identified nearly 153,000 borrowers who are enrolled in SAVE plan who will have their debt cancelled starting this week, and those borrowers will receive an email today from President Biden informing them of their imminent relief. Next week, the Department of Education will also be reaching out directly to borrowers who are eligible for early relief but not currently enrolled in the SAVE Plan to encourage them to enroll as soon as possible.
This shortened time to forgiveness will particularly help community college and other borrowers with smaller loans and put many on track to being free of student debt faster than ever before. Under the Biden-Harris Administration’s SAVE plan, 85 percent of future community college borrowers will be debt free within 10 years. The Department will continue to regularly identify and discharge other borrowers eligible for relief under this provision on SAVE.
Over four million borrowers have a $0 monthly payment under the SAVE Plan
Last year, President Biden launched the SAVE plan – the most affordable repayment plan ever. Under the SAVE plan, monthly payments are based on a borrower’s income and family size, not their loan balance. The SAVE plan ensures that if borrowers are making their monthly payments, their balances cannot grow because of unpaid interest. And, starting in July, undergraduate loan payments will be cut in half, capping a borrower’s loan payment at 5% of their discretionary income. Already, 7.5 million borrowers are enrolled in the SAVE Plan, and 4.3 million borrowers have a $0 monthly payment.
Today, the White House Council of Economic Advisers released an issue brief highlighting how low and middle-income borrowers enrolled in SAVE could see significant saving in terms of interest saved over time and principal forgiven as a result of SAVE’s early forgiveness provisions.
President Biden’s Administration has approved student debt relief for nearly 3.9 million Americans through various actions
Today’s announcement builds on the Biden-Harris Administration’s track record of taking historic action to cancel student debt for millions of borrowers. Since taking office, the Biden-Harris Administration has approved debt cancellation for nearly 3.9 million Americans, totaling almost $138 billion in debt relief through various actions. This relief has given borrowers critical breathing room in their daily lives, allowing them to afford other expenses, buy homes, start businesses, or pursue dreams they had to put on hold because of the burden of student loan debt. President Biden remains committed to providing debt relief to as many borrowers as possible, and won’t stop fighting to deliver relief to more Americans.
The Biden-Harris Administration has also taken historic steps to improve the student loan program and make higher education more affordable for more Americans, including:
Achieving the largest increases in Pell Grants in over a decade to help families who earn less than $60,000 a year achieve their higher-education goals.
Fixing the Public Service Loan Forgiveness program so that borrowers who go into public service get the debt relief they’re entitled to under the law. Before President Biden took office, only 7,000 people ever received debt relief through PSLF. After fixing the program, the Biden-Harris Administration has now cancelled student loan debt for nearly 800,000 public service workers.
Cancelling student loan debt for more than 930,000 borrowers who have been in repayment for over 20 years but never got the relief they earned because of administrative failures with Income-Driven Repayment Plans.
Pursuing an alternative path to deliver student debt relief to as many borrowers as possible in the wake of the Supreme Court’s decision striking down the Administration’s original debt relief plan. Last week, the Department of Education released proposed regulatory text to cancel student debt for borrowers who are experiencing hardship paying back their student loans, and late last year released proposals to cancel student debt for borrowers who: owe more than they borrowed, first entered repayment 20 or 25 years ago, attended low quality programs, and who would be eligible for loan forgiveness through income-driven repayment programs like SAVE but have not applied.
Holding colleges accountable for leaving students with unaffordable debts.
It’s easy to enroll in SAVE. Borrowers should go to studentaid.gov/save to start saving.
The Biden-Harris Administration believes that education beyond high school should unlock doors to opportunity, not leave borrowers stranded with debt they cannot afford. That’s why, from day one, President Biden and Vice President Harris have been working to fix the broken student loan system and make college more affordable. Today, the Biden-Harris Administration announced the official launch of the most affordable repayment plan ever created – the Saving on a Valuable Education (SAVE) plan and kicked off an outreach campaign to encourage eligible borrowers to sign up for the plan.
“On Day One of my Administration, I promised to fix the problems of the existing student loan program that hurt borrowers for much too long. And I’m proud we’re keeping that promise,” President Biden declared. “We’ve already approved over $116 billion in debt cancellation for 3.4 million Americans, no matter how many lawsuits, challenges, or roadblocks Republican elected officials or special interests tried to put in our way. And today I’m proud to announce a new program called the SAVE Plan. It’s the most affordable student loan plan ever.”
The SAVE plan is an income-driven repayment (IDR) plan that calculates payments based on a borrower’s income and family size – not their loan balance – and forgives remaining balances after a certain number of years. The SAVE plan will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster. The SAVE plan builds on the actions the Biden-Harris Administration has already taken to support students and borrowers, including cancelling more than $116 billion in student loan debt for 3.4 million Americans.
The Biden-Harris Administration estimates that over 20 million borrowers could benefit from the SAVE plan. Borrowers can sign up today by visiting StudentAid.gov/SAVE
Specifically, the SAVE plan will:
Cut payments on undergraduate loans in half. Borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their discretionary income. Those who have undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income based upon the original principal balances of their loans.
Bring many borrowers’ loan payments to $0 per month.A borrower’s monthly payment amount is based on their discretionary income—defined under the SAVE plan as the difference between their adjusted gross income (AGI) and 225% of the U.S. Department of Health and Human Services Poverty Guideline amount for their family size. This means a single borrower who makes about $15 an hour will not have to make any monthly payments. Borrowers earning above that amount would save around $1,000 a year on their payments compared to other IDR plans. The Department of Education estimates that more than 1 million additional low-income borrowers will qualify for a $0 payment. This will allow them to focus on food, rent, and other basic needs instead of loan payments.
Ensure that borrowers never see their balance grow as long as they keep up with their required payments. The Department of Education will stop charging any monthly interest not covered by the borrower’s payment on the SAVE plan. As a result, borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest. For example, if a borrower has $50 in interest that accumulates each month and their payment is $30 per month under the new SAVE plan, the remaining $20 would not be charged as long as they make their $30 monthly payment. The Department of Education estimates that 70 percent of borrowers who were on an IDR plan before the payment pause would stand to benefit from this change. Coinciding with the launch of the SAVE plan, the White House Council of Economic Advisers released a new blog post that models how the income benefit of the SAVE plan could prevent a lower-income borrowers’ balance from increasing by nearly 78% over a 20-year repayment period.
Provide early forgiveness for low-balance borrowers. IDR plans require all borrowers, even those who only attended school for a single term, to repay their loans for at least 20 or 25 years before receiving forgiveness of any outstanding balance. Under the SAVE plan, borrowers whose original principal balances were $12,000 or less will receive forgiveness after 120 payments (the equivalent of 10 years in repayment). For each additional $1,000 borrowed above that level, the plan adds an additional 12 payments (equivalent of 1 year of payments) for up to a maximum of 20 or 25 years. For example, if a borrower’s original principal balance is $14,000, they will see forgiveness after 12 years. Payments made previously (before 2024) and those made going forward will count toward these maximum forgiveness timeframes.
The benefits of the SAVE plan will be particularly critical for low- and middle-income borrowers, community college students, and borrowers who work in public service. Overall, the Department of Education estimates that the plan will have the following effects for future cohorts of borrowers compared to the IDR plan, called the Revised Pay-As-You-Earn (REPAYE) plan:
Borrowers will see their total payments per dollar borrowed fall by 40%. Borrowers with the lowest projected lifetime earnings will see payments per dollar borrowed fall by 83%, while those in the top would only see a 5% reduction.
A typical graduate of a four-year public university will save nearly $2,000 a year.
A first-year teacher with a bachelor’s degree will see a two-third reduction in total payments, saving more than $17,000, while pursuing Public Service Loan Forgiveness.
85% of community college borrowers will be debt-free within 10 years because of the early forgiveness for low-balance borrowers provision of the plan.
On average, Black, Hispanic, American Indian and Alaska Native borrowers will see their total lifetime payments per dollar borrowed cut in half.
Borrowers who are already on the REPAYE plan will be automatically enrolled in the SAVE plan and see their payments automatically adjust with no action on their part.
Department of Education Launches Outreach Campaign
To encourage borrowers to sign up for the new SAVE plan, the Department of Education is partnering with grassroots organizations to launch an outreach campaign, “SAVE on Student Debt”. The campaign will leverage strategic partnerships across public, private, and nonprofit sectors to help borrowers take full advantage of the benefits provided by the SAVE plan, as well as ensure borrowers know about other resources and debt forgiveness programs available from the Department. This partnership will be led by the Department in collaboration with Civic Nation, the National Association for the Advancement of Colored People (NAACP), the National Urban League (NUL), Rise, the Student Debt Crisis Center, UnidosUS, and Young Invincibles.
The outreach campaign will build on the direct outreach underway by the Department of Education and Federal Student Aid to ensure borrowers know about the SAVE plan and other programs to help them access debt relief. In the coming days, the Department will contact nearly 30 million borrowers to invite them to apply for the SAVE plan. The direct-to-borrower communication will highlight how the new IDR application takes less than 10 minutes to fill out. The “SAVE on Student Debt” campaign and direct-to-borrower communications will also focus on enrolling borrowers into SAVE who will benefit the most from the plan but are often hardest to reach. Importantly, the new SAVE plan lowers barriers that previously stood in the way of higher enrollment rates of other IDR plans by streamlining repayment options, automatically enrolling delinquent borrowers who have given consent to access their tax information into the plan, and eliminating the need to manually recertify their income each year. This is part of the Department’s broader improvements to the student loan system and robust outreach campaign to support borrowers when the payment pause ends this fall.
Broader Efforts to Deliver Relief to Student Loan Borrowers
The SAVE plan builds on broader actions by the Biden-Harris Administration to deliver relief to student loan borrowers, fix problems in the student loan system, and make college more affordable. To date, the Biden-Harris Administration has cancelled more than $116 billion in student loan debt for 3.4 million Americans, including:
$39 billion for 804,000 borrowers as a result of fixes to IDR plans who have been in repayment for over 20 years but never got the relief they deserved
$45.7 billion for 662,000 public service workers
$10.5 billion for 491,000 borrowers who have a total and permanent disability; and
$22 billion for nearly 1.3 million borrowers who were cheated by their schools, saw their schools precipitously close, or are covered by related court settlements.
The Administration has also achieved the largest increases in Pell Grants in over a decade to help families who earn less than roughly $60,000 per year; fixed the Public Service Loan Forgiveness program so borrowers who go into public service get the debt relief they are entitled to; is holding colleges accountable for leaving students with mountains of debt and without good job prospects; and announced that it is pursuing an alternative path to deliver debt relief to as many student loan borrowers as possible, as quickly as possible in the wake of the Supreme Court’s decision on the Administration’s student debt relief plan.
No President has fought harder for student debt relief than President Biden, and he’s not done yet. “President Biden will not let Republican elected officials succeed in denying hardworking Americans the relief they need,” the White House stated. Biden gets it. He understands how lives are being upended, derailed, ambitions curtailed, because of crippling student loan debt that, as a reminder, is the ONLY DEBT that cannot be erased through bankruptcy. Think about it, how many Republican Congressmembers took advantage of COVID relief loan forgiveness, intended to help employers retain workers, but can’t find a way of making the loan obligation fair, when interest rates for others were at near zero. If they don’t allow forgiveness of the entire loan, they should get rid of the onerous, unjustified interest that is compounding, and provide a fair means to repay the principle.
For so many, a college degree has been their ticket into the middle class, home ownership, a legacy for their children, and a means of finally ending the cycle of poverty. College tuition has been increasing an ungodly rates, two and three times the cost of living – because the colleges can – which is why the balances for loan repayment are so high. Biden sought to address the injustice and the imbalance by giving student borrowers the same advantage he gave businesses to stay afloat and prevent the economic hardship of the historic pandemic from becoming a Greater Great Depression.
Here is a fact sheet of new actions Biden is taking to provide debt relief and support for student loan borrowers –Karen Rubin/news-photos-features.com
In light of the Supreme Court’s ruling this morning, President Biden and his Administration have already taken twostepsthis afternoon aimed at providing debt relief for as many borrowers as possible, as fast as possible, and supporting student loan borrowers:
The Secretary of Education initiated a rulemaking process aimed at opening an alternative path to debt relief for as many working and middle-class borrowers as possible, using the Secretary’s authority under the Higher Education Act.
The Department of Education (Department) finalized the most affordable repayment plan ever created, ensuring that borrowers will be able to take advantage of this plan this summer—before loan payments are due. This plan helps the typical borrower save more than $1,000 a year.
In addition, to protect the most vulnerable borrowers from the worst consequences of missed payments following the payment restart, the Department is instituting a 12-month “on-ramp” to repayment, running from October 1, 2023 to September 30, 2024, so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.
These actions reflect the President’s belief that an education beyond high school should be a ticket to the middle class. It also builds on the unprecedented steps President Biden and his Administration have taken to make college more affordable for working and middle-class families and make federal student loans more manageable. The Biden-Harris Administration has:
Secured the largest increases to Pell Grants in a decade.
Fixed broken student loan programs such as Public Service Loan Forgiveness, so borrowers actually get the relief they deserve.
Approved more than $66 billion in loan cancellation for 2.2 million borrowers across the country, including public service workers and those who have been defrauded by their colleges.
Debt Relief for As Many Borrowers as Possible, as Fast as Possible
The President remains committed to providing relief to low- and middle-income borrowers. For too many Americans, a ticket to the middle-class remains out of reach because of unmanageable student loan debt. COVID-19 exacerbated that challenge – risking tens of millions of borrowers’ financial security and futures because of the economic harms brought on by a once-in-a-century pandemic.
Today, the Department initiated rulemaking aimed at opening an alternative path to debt relief for as many borrowers as possible, using the Secretary of Education’s authority under the Higher Education Act. The Department issued a notice, which is the first step in the process of issuing new regulations under this so-called “negotiated rulemaking” process. The notice announces a virtual public hearing on July 18th and solicits written comments from stakeholders on topics to consider.
Following the public hearing, the Department will finalize the issues to be addressed through rulemaking and begin the negotiated rulemaking sessions this fall. The Department will complete this rulemaking as quickly as possible.
Lowering Monthly Payments
The Biden-Harris Administration today also finalized the most affordable repayment plan ever created, called the Saving on a Valuable Education (SAVE) plan. This income-driven repayment plan will cut borrowers’ monthly payments in half, help the typical borrower save more than $1,000 per year on payments, allow many borrowers to make $0 monthly payments, and ensure borrowers don’t see their balances grow from unpaid interest.
Specifically, the plan will:
For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.
Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment under this plan.
Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.
Not charge borrowers with unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
All student borrowers in repayment will be eligible to enroll in the SAVE plan. They will be able to enroll later this summer, before any monthly payments are due. Borrowers who sign up or are already signed up for the current Revised Pay as You Earn (REPAYE) plan will be automatically enrolled in SAVE once the new plan is implemented. To learn more about the new SAVE plan, visit the Department of Education’s website.
Ensuring Support for Borrowers Most at Risk
To protect the most vulnerable borrowers, the Department is creating a temporary “on-ramp” to protect borrowers from the harshest consequences of late, missed, or partial payments for up to 12 months. While payments will be due and interest will accrue during this period, interest will not capitalize at the end of the on-ramp period. Additionally, borrowers will not be reported to credit bureaus, be considered in default, or referred to collection agencies for late, missed, or partial payments during the on-ramp period. Future monthly bills for borrowers not enrolled in an income-driven repayment plan will be automatically adjusted to reflect the accrued interest during those months.
Borrowers who can pay should do so, but this on-ramp period gives borrowers who cannot make payments right away the necessary time to adjust, enabling them to ultimately make their monthly payments and meet their financial obligations on their loans. Borrowers do not need to take any action to qualify for this on-ramp.
