By Trish Svoboda
The Biden-Harris Administration has approved an additional $7.7 billion in student loan relief for 160,500 borrowers. This includes those under the Public Service Loan Forgiveness, the SAVE Plan, and those receiving forgiveness on income-driven repayment. Over 8 million borrowers have benefited from the SAVE Plan, including 4.6 million with a $0 monthly payment. The total loan forgiveness now stands at $167 billion, benefiting 4.75 million Americans. This means more than one in ten federal student loan borrowers have received some form of debt relief.
The U.S. Department of Education has recently updated the schedule for the payment count adjustment. This administrative correction guarantees that borrowers receive credit for their progress toward forgiveness under the Income-Driven Repayment (IDR) and Public Service Loan Forgiveness (PSLF) programs. Borrowers who could gain from loan consolidation have a deadline of June 30, 2024, to submit their applications. More information about the payment count adjustment can be found on the Department’s website.
The debt relief is broken down into the following categories:
· $5.2 billion for 66,900 borrowers through fixes to PSLF: The Administration has now approved $68 billion in forgiveness for more than 942,000 borrowers through PSLF.
· $613 million for 54,300 borrowers through the SAVE Plan: This relief will go to borrowers enrolled in the SAVE Plan who had smaller loans for their postsecondary studies. Borrowers can receive relief after at least 10 years of payments if they originally borrowed $12,000 or less. Each additional $1,000 in borrowing adds 12 more months until forgiveness. All borrowers on the SAVE Plan receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school. The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan. Today’s announcement brings total relief approved under the SAVE Plan to $5.5 billion for 414,000 borrowers.
· $1.9 billion for 39,200 borrowers through administrative adjustments to IDR payment counts. These adjustments have brought borrowers closer to forgiveness and address longstanding concerns with the misuse of forbearance by loan servicers. Including today’s announcement, the Biden-Harris Administration has now approved $51.0 billion in IDR relief for more than 1 million borrowers.
A recent report by the Council of Economic Advisers suggests that the debt relief measures and other actions by the Administration could stimulate short-term spending and positively impact the mental health, financial stability, and long-term goals like homeownership and entrepreneurship of borrowers.
Borrowers have started to receive approval notifications via email. The processing of their relief will be carried out in the upcoming weeks.
