If you’re a federal student loan borrower, don’t ignore that email from President Joe Biden.
Beginning Wednesday, nearly 153,000 eligible borrowers enrolled in the income-based Saving on a Valuable Education (SAVE) loan repayment plan will receive an email from the president notifying them that “all or a portion of” their federal student loan debt will be wiped out because they’ve qualified for early loan forgiveness.
Biden is scheduled to discuss the move Wednesday during a stop in California.
The administration said that the borrowers are the first to benefit from a provision within the SAVE Plan that forgives debt for those who borrowed $12,000 or less and have been in repayment for at least a decade.
The latest round of debt relief is possible because the administration is implementing the provision about six months ahead of schedule, officials said. Going forward, SAVE Plan participants who become eligible for forgiveness will see their loans automatically canceled, according to the U.S. Department of Education.
The step will automatically discharge about $1.2 billion in loans. In total, the administration said it has made more than two dozen executive actions to approve loan relief for nearly 3.9 million borrowers totaling about $138 billion.
“The people getting the debt relief announced today have sacrificed and saved for a decade or more to make their student loan payments, have lower loan balances and are more likely to have qualified for Pell Grants to attend college,” Education Secretary Miguel Cardona told reporters.
Administration officials said they do not yet have a breakdown by state of how many SAVE Plan participants qualify for the just-announced automatic discharge. Those included in this week’s announcement represent only a fraction of the 7.5 million borrowers enrolled in the SAVE Plan.
In October, federal loan repayments resumed for millions of people after a more than three-year pause during the COVID-19 pandemic. The administration touted new options to pay down student debt, including the SAVE Plan, which officials said has cut payments for more than 4 million borrowers to $0 a month.
The U.S. Supreme Court in late June blocked Biden’s plan to forgive federal student loan debt of up to $10,000 for borrowers with an annual income of less than $125,000. Pell Grant recipients would have gotten up to $20,000 in loan help.
How this works
Borrowers in the SAVE plan whose balances are $12,000 or less and have been in repayment for at least a decade are eligible for relief. For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. All SAVE borrowers receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.
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