The decision by the Biden administration to forgive over $39 billion in student loans has been announced, benefiting over 800,000 borrowers.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” U.S. Secretary of Education Miguel Cardona said in a statement.
“Today, the Biden-Harris Administration is taking another historic step to right these wrongs and announcing $39 billion in debt relief for another 804,000 borrowers.”
Unlike President Joe Biden’s previous attempt to cancel up to $20,000 in student debt per eligible borrower, the relief provided in the current proposal will not be immediate. Instead, a new repayment plan called the Saving on a Valuable Education (SAVE) plan has been introduced, aiming to gradually provide relief to borrowers by reducing their monthly payments and ultimately saving them thousands of dollars.
According to a posting in the Federal Register by the Department of Education, borrowers who participated in the old plan repaid $10,956 for every $10,000 they borrowed, while under the new plan, they would only need to repay $6,121.
This update comes as student loan repayments are set to resume in October following a pause due to the pandemic.
The recent action by the Biden administration is part of its ongoing efforts to forgive substantial amounts of student loan debt, following a Supreme Court ruling that overturned a broader loan forgiveness initiative proposed by the administration.
The forgiveness plan specifically targets individuals with Direct Loans or Federal Family Education Loans held by the Department of Education.
In total, Biden’s administration has approved $116.6 billion in student debt relief for over 3.4 million Americans.
To propose a legally viable solution, the Department of Education has initiated the process of formulating a new plan based on the Higher Education Act, including public hearings as indicated in the Federal Register post.
