The White House Wednesday said he approved $7.7 billion in student debt cancellation for 160,500 borrowers, part of his continuing effort to provide relief after last year's Supreme Court ruling. blocked President Joe Biden's plan for widespread college loan forgiveness.
With the latest round of cancellations, the administration wiped out a total of $167 billion in student loans for 4.75 million people, or about 1 in 10 student loan borrowers, the Education Department said.
People who are eligible for debt forgiveness in the latest round of debt forgiveness include public servants such as teachers and law enforcement officers, as well as tens of thousands of people who have included in Biden's program. new loan repayment program, called SAVE. This program, created last year, pegs a borrower's monthly payment at their income, thereby reducing their financial payments, and is designed to address a pitfall of previous repayment programs that allowed interest to snowball.
“One in ten federal borrowers receiving debt relief means one in ten borrowers now have financial flexibility and a reduced burden,” U.S. Education Secretary Miguel Cardona said in the release.
Concerns about the cost of college are growing, with about half of Americans saying college is only worth the money if you don't have to go into debt, according to a new Pew Research Center. analysis. And only about 1 in 5 Gen Z college graduates say their degree was worth the investment, compared to more than half of baby boomers, MassMutual find in a new investigation.
Here's what you need to know about the latest wave of forgiveness.
Who is eligible for loan forgiveness?
The Biden administration said three groups of borrowers received debt forgiveness in the latest round.
- 66,900 borrowers will receive $5.2 billion in forgiveness through the Public Service Loan Forgiveness program, designed to help public workers such as teachers, nurses and law enforcement get the cancellation of their debt after 10 years of repayment.
- 54,300 borrowers will receive $613 million in forgiveness through the SAVE plan.
- Another 39,200 borrowers will receive $1.9 billion in forgiveness through adjustments to their income-driven repayment plans. These plans were sometimes mismanaged by loan servicers, making it harder for some borrowers to get forgiveness.
How will I know if I am eligible for forgiveness?
The Biden administration said those eligible for this latest round of debt forgiveness will receive an email regarding their approval.
The cancellation of the debt will then be processed in the coming weeks, the press release added.
Will Biden offer more student loan forgiveness?
Yes, because the Biden administration is working on a new effort to provide widespread loan forgiveness by the law on higher education.
The new plan could provide relief to about 30 million borrowers, wiping out all or part of their college loans.
The Biden administration said Wednesday that the public comment period on the new regulations closed on May 17, with the Department of Education now reviewing the thousands of comments it received.
“Our goal is to issue a final rule that results in relief this fall,” the Department of Education said in a statement released Wednesday.
How can borrowers enroll in SAVE?
The SAVE plan is open for registration here.
The income-driven repayment plan bases monthly payments on income and family size, with some low-income households with more family members paying little or nothing each month. For example, a family of four with an annual income of less than $50,000 would have monthly payments of $0.
Another benefit of the program is that it eliminates snowballing interest. In previous plans, borrowers sometimes saw their balances increase if their monthly payments did not cover their entire interest, a financial situation called “negative amortization.” That's why some borrowers may have left college with, say, $20,000 in debt, but ended up with much larger balances, even after years of paying off.