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More than 150,000 borrowers will have their student loans automatically discharged this month, the Biden administration announced Wednesday.
This tranche of debt relief, which totals $1.2 billion, comes after the Education Department moved up its implementation timeline for the new income-driven repayment plan known as Saving on a Valuable Education. The plan offers loan forgiveness after 10 years to borrowers who took out $12,000 or less. Typical income-driven repayment plans discharge loans after 20 or 25 years.
The quicker pathway to cancellation was initially supposed to take effect July 1, but the department decided last month to implement it early. Since the department began rolling out SAVE last summer, 7.5 million borrowers have signed up for the plan, and 4.3 million now have a zero-dollar monthly payment.
“Many SAVE forgiveness recipients come from lower- and middle-income backgrounds,” Education Secretary Miguel Cardona said on a call with reporters. “Many took out loans to attend community colleges. Some were at higher risk for delinquency in the fall. That’s why the actions we’re announcing today do matter.”
Borrowers who will see the relief received an email from President Biden yesterday, notifying them that their loans will be wiped out in the coming days, said Natalie Quillian, deputy chief of staff at the White House. The department will regularly notify and discharge the student loans for borrowers who become eligible for relief via SAVE.
“This announcement is a reflection of the president’s commitment to cancel student debt for as many Americans as possible as quickly as possible,” Quillian said.
The Biden administration has now forgiven $138 billion in student loans for 3.9 million borrowers in total. Student debt relief advocates praised Wednesday’s announcement and urged the department to keep the relief coming. Meanwhile, congressional Republicans and other critics of the administration’s debt-relief plans slammed the move. Dr. Bill Cassidy, the Louisiana Republican senator who is the ranking member of the Senate education committee, noted that the Education Department has struggled to successfully launch the new Free Application for Federal Student Aid.
“The Biden Department of Education has been unable to fulfill their basic responsibilities mandated by Congress and essential to families like implementing FAFSA,” Cassidy said in a statement. “Instead, they have spent a considerable amount of time prioritizing their student loan schemes to shift someone else’s debt onto taxpayers that chose not to go to college or already paid off their loans. This is unfair, manipulative and a cynical attempt to buy votes.”
