President Biden Announces $1.2 Billion Student Debt Cancellation for SAVE Borrowers

Today, President Biden made a significant announcement approving $1.2 billion in student debt cancellation for nearly 153,000 borrowers currently enrolled in the Saving on a Valuable Education (SAVE) repayment plan. This action is part of the ongoing efforts by the Biden-Harris Administration to address student loan debt, marking a total student debt cancellation of almost $138 billion for close to 3.9 million borrowers through a series of executive actions.

The borrowers set to benefit from this relief are the first recipients of the SAVE plan policy, which grants debt forgiveness to individuals who have been in repayment for as little as 10 years and have taken out $12,000 or less in student loans. Originally scheduled for July, the implementation of this provision has been accelerated, providing relief to borrowers ahead of schedule.

Since the inception of his Presidency, President Biden has been dedicated to overhauling the student loan system to ensure that higher education is a means to enhance social mobility rather than a barrier to economic advancement. Despite resistance from Republicans in Congress and their allies, the Biden-Harris Administration has continued to push forward with student debt cancellation initiatives, offering much-needed relief to millions of borrowers.

With the SAVE plan, borrowers enrolled in the program, who have been in repayment for at least a decade and originally borrowed $12,000 or less for their college education, will start receiving debt cancellation starting this week. Those who borrowed an additional $1,000 will see their loans forgiven after an extra year of payments. The U.S. Department of Education has identified close to 153,000 borrowers under the SAVE plan who will have their debt cancelled, with recipients receiving a direct email from President Biden notifying them of the impending relief.

In the upcoming week, the Department of Education will reach out to eligible borrowers who are not currently enrolled in the SAVE Plan but qualify for early relief, encouraging them to enroll promptly. The streamlined forgiveness process will particularly benefit community college attendees and other borrowers with smaller loan amounts, accelerating their journey to debt-free living.

Under the SAVE plan, 85% of future community college borrowers are projected to be debt-free within a decade. Additionally, the Department will continue to identify and discharge other eligible borrowers for relief under this provision of the SAVE program.

Last year, President Biden introduced the SAVE plan, the most budget-friendly repayment scheme to date. With payments based on income and family size rather than the loan balance, borrowers under SAVE are assured that their balances will not increase due to unpaid interest if they make regular monthly payments. Furthermore, starting in July, undergraduate loan payments will be halved, capping a borrower’s payment at 5% of their discretionary income. Currently, 7.5 million borrowers are enrolled in the SAVE Plan, with 4.3 million enjoying a $0 monthly payment.

The White House Council of Economic Advisers released a report today illustrating the substantial financial benefits that low and middle-income borrowers under the SAVE plan could experience in terms of interest savings over time and principal forgiveness as a result of the program’s early forgiveness provisions.

Today’s announcement adds to the Biden-Harris Administration’s track record of taking unprecedented actions to alleviate student debt burdens. Since assuming office, the Administration has approved debt cancellation for nearly 3.9 million Americans, totaling almost $138 billion in relieved debt through various measures. This relief has lifted a financial weight off borrowers, enabling them to manage other expenses, invest in homes, start businesses, or pursue postponed aspirations due to the encumbrance of student loan debt.

President Biden remains resolute in his commitment to providing debt relief to as many borrowers as feasible and is relentless in his advocacy to deliver relief to more Americans. Alongside debt cancellation efforts, the Administration has also undertaken groundbreaking steps to revamp the student loan program and make higher education more accessible for a broader swath of the American populace.

Enrollment in the SAVE Plan is straightforward; borrowers can visit studentaid.gov/save to initiate savings on their student loans.