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Student debt wiped clean for 153K borrowers

Bill Schackner
| Wednesday, February 21, 2024 1:27 p.m.
AP
People in favor of canceling student debt protest outside the Supreme Court, Friday, June 30, 2023.

About 153,000 student borrowers nationwide learned by email this week that their college debt has been wiped clean by the federal government.

The U.S. Department of Education says it has discharged or eliminated $1.2 billion in student loans under the Biden administration’s new income-driven student loan repayment plan called Saving on a Valuable Education, or SAVE. It was unveiled last summer.

The forgiveness notifications, announced Wednesday, come amid a continuing, fierce debate in Washington and elsewhere about the extent to which college students ought to receive dispensation from rapidly rising higher education costs and resulting debt that hangs over graduates for decades.

Amounts in many cases exceed $100,000, including in Pennsylvania, where average student debt totals typically are third highest in the nation, averaging $39,375, trailing only New Hampshire and Delaware, according to the Institute for College Access and Success.

In June, the U.S. Supreme Court struck down a more broad loan forgiveness program enacted by President Joe Biden, saying he lacked constitutional authority. The president since has used executive authority to chip away at what he calls a broken system in a more targeted way, easing or eliminating amounts owed.

To date, 7.5 million borrowers are enrolled in SAVE, 4.3 million of whom have a $0 monthly payment.

Education Department officials were not immediately available for comment Wednesday. But U.S. Secretary of Education Miguel Cardona reiterated the program’s intent in a department statement.

“With today’s announcement, we are once again sending a clear message to borrowers who had low balances: If you’ve been paying for a decade, you’ve done your part, and you deserve relief,” he said. “Under President Biden’s leadership, our administration has now approved loan forgiveness for nearly 3.9 million borrowers, and our historic fight to cancel student debt isn’t over yet.”

In January, Biden announced his administration was accelerating the shortened time to forgiveness component of the SAVE Plan by about six months to offer borrowers “relief they have earned as quickly as possible,” according to the department’s statement.

For a borrower to be eligible for this forgiveness, they must be enrolled in the SAVE Plan, have been making at least 10 years of payments and have originally taken out $12,000 or less for college, according to officials.

For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. All borrowers on SAVE receive forgiveness after 20 or 25 years, depending on if they have loans for graduate school.

According to the administration, debt cancellation for nearly 3.9 million students has been approved, an amount of $138 billion collectively.

Biden’s efforts to lessen or eliminate student debt are likely to figure in the president’s 2024 reelection bid.

His administration has pointed to the largest increase to Federal Pell Grants in a decade as an accomplishment, as well as new rules to protect borrowers from career programs that leave graduates with unaffordable debts or insufficient earnings.


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