Last week, the Biden-Harris Administration announced a plan to accelerate the forgiveness timeline for the Saving on a Valuable Education (SAVE) Plan.
Starting next month, eligible borrowers - those who have made at least 10 years of monthly payments and initially borrowed $12,000 or less for college expenses - will have their entire balances forgiven.
The Education Department is fast-tracking this debt relief months ahead of the original July 1, 2024 date.
“Beyond being the most affordable student loan repayment plan ever available, the Biden-Harris Administration designed the SAVE Plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before,” said U.S. Secretary of Education Miguel Cardona.
The Education Department urges all borrowers who originally borrowed $12,000 or less to apply for SAVE as soon as possible.
The loans of eligible recipients will be discharged automatically, requiring no action on their part.
“I want folks to recognize [that it takes] 10 minutes to fill out the SAVE plan, and you could be getting an email as early as February telling you that your debt is cleared out,” Cardona said.
SAVE enrollments are on the rise
SAVE—an income-driven repayment plan that adjusts borrowers' monthly payments based on income and family size—has seen a massive surge in enrollment lately.
As of early January, 6.9 million borrowers had already enrolled in the SAVE Plan, more than double the number of people who enrolled in the Revised Pay As You Earn (REPAYE) plan that the SAVE Plan replaced in August.
Borrowers on SAVE are repaying an estimated $374 billion in federal student loans, which amounts to nearly 30% of all Direct Loans dollars in repayment, deferment, or forbearance.
SAVE enrollees have been reporting significant financial benefits compared to the previous REPAYE Plan, with 3.9 million reportedly having a $0 payment and others saving an estimated $117 a month.
"With lower monthly payments, protection from runaway interest, and faster timelines to debt forgiveness, President Biden’s SAVE plan is not only benefiting millions of current borrowers but also providing the students of today and tomorrow with a more affordable pathway to college degrees and credentials,” Cardona said.
More forgiveness to come?
The SAVE Plan forgiveness is yet another initiative by the Biden-Harris Administration to take the burden of student debt off Americans’ shoulders.
According to Creditnews Student Debt Tracker, the administration has already approved nearly $132 billion in targeted relief for over 3.6 million borrowers.
Next up are the 6.9 million SAVE borrowers, with potentially more to come as Biden's 2024 reelection campaign goes into full swing.
