The Biden administration announced Friday that it will cancel $39 billion in federal student loans for more than 804,000 borrowers, following the US Supreme Court’s decision last month to strike down the White House’s previous student loan forgiveness plan.
The Education Department said that it will do so by accounting for payments made under income-driven repayment plans — which are capped to a certain percent of borrowers’ income — that it argues should have qualified toward loan forgiveness, but were previously unrecognized by loan servicers that collect payments.
“For far too long, borrowers fell through the cracks of a broken system that failed to keep accurate track of their progress towards forgiveness,” US Secretary of Education Miguel Cardona said in a statement Friday. “By fixing past administrative failures, we are ensuring everyone gets the forgiveness they deserve.”
This new plan differs from the one that was struck down by the Supreme Court, which would have forgiven $10,000 worth of loans for most student borrowers and $20,000 for Pell Grant recipients, applying to a population of about 37 million people.
Separately, Biden is also creating a new income-driven repayment plan — called SAVE (Saving on a Valuable Education) — that will allow some borrowers to cut their monthly payments in half and cancel the rest of their debt after making 10 years of payments.
Here’s what you need to know about whether you might qualify for Biden’s latest student loan forgiveness plan and how to access it.
Who is eligible?
The Education Department said Friday that borrowers who have taken out Direct Loans or Federal Family Education Loans held by the Education Department, including any Parent PLUS loans, may be eligible for forgiveness.
They would have had to have made the equivalent of either 20 or 25 years of qualifying payments — or 240 or 300 monthly payments — to be eligible for forgiveness. The required payments vary based…
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