Biden admin announces $39B in student loan forgiveness
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ALBUQUERQUE, N.M. — New relief could be coming for student loan borrowers who lost hope after the Supreme Court’s ruling on the Biden administration’s forgiveness plan.
Last month, the high court struck down a plan that would’ve provided up to $20,000 in debt relief for 43 million borrowers.
The U.S. Department of Education said Friday it would automatically forgive student loans for more than 800,000 borrowers. They say it will total $39 billion in outstanding loans.
It’s the first step the department is taking to pursue federal student loan relief with the authority they have. This comes as 43 million Americans are about to resume paying off their loans.
Come Oct. 1, most borrowers will resume paying their student loans – except for a select few who will have their loans automatically forgiven under Biden’s new plan.
In order to qualify, you had to have made either 20 or 25 years of monthly “income-driven repayment plan” payments.
That means, if you’re in the program, your monthly payments would be lower based on your income. It also forgives the remaining balance after a certain number of years.
If you qualify, you’ll get an email from your loan provider.
The Biden administration is developing a slow repayment on-ramp. Borrowers who can’t make a payment for the first 12 months wouldn’t be penalized. A plan called, “SAVE,” an income-driven repayment program, will cut the minimum payments in half. It cuts it from 10% of discretionary income to 5%.
After 10 years of payments, the department would forgive loans of $12,000 or less.
President Biden also directed the education department to create a new plan for loan forgiveness based on the “Higher Education Act.” He promised the proposal would be “legally sound” but it would also take longer.
Stephanie M. Rodriguez, New Mexico’s higher education secretary, issued the following statement in response to the debt relief announced Friday:
“I commend the Biden-Harris administration’s decision to forgive federal student loans for the more than 800,000 borrowers left behind by historic issues in how qualifying payments for income-driven repayment plans were counted. This decision makes long overdue fixes to federal student loan programs that give hardworking Americans the credit they deserve for decades of loan payments. The change also provides much-needed relief to low-income borrowers and their families and it will benefit thousands of New Mexicans who should have been eligible for forgiveness but did not receive it. The state will continue to work toward eliminating student loan debt through our leading tuition-free college programs and generous state-funded loan repayment programs.”