Biden promises to cancel incoming student loan debt

The Biden-Harris Administration has announced a new student loan forgiveness plan that targets borrowers enrolled in the Saving on a Valuable Education (SAVE) plan.  

The initiative, set to launch in February, shall erase the debt of borrowers enrolled on the SAVE plan, who have made 10 years of monthly payments and have an original balance of $12,000 or less in federal loans. While 6.9 million borrowers are currently enrolled in the SAVE plan, 30 million people are eligible for debt relief.  

Borrowers who have an initial balance greater than $12,000 are also eligible for loan forgiveness: “for every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments.” So, borrowers who took out an original loan of $17,000, for example, shall see debt relief after an additional five years of payments.  

All debt relief shall be automatically applied to borrowers’ accounts, meaning they do not have to take action.  

“It’s part of our ongoing efforts to act as quickly as possible to give more borrowers breathing room so they can get out from under the burden of student loan debt”

President Joe Biden

The SAVE plan is one of four income-driven repayment plans that calculate borrowers’ monthly student loan payments based on their salary and family size. Borrowers who make under $15 an hour pay $0 a month towards their student loans. This plan offers far more generous terms than other repayment plans – while other plans offer debt cancellations after 20 or 25 years of repayments, SAVE offers it after just ten years.  

The U.S. Secretary of Education Miguel Cardona stated in a press release: “Beyond being the most affordable student loan repayment plan ever available, the Biden-Harris Administration designed the SAVE plan to put community college students and other low-balance borrowers on a faster track to debt forgiveness than ever before”.  

In a statement, President Biden said: “It’s part of our ongoing efforts to act as quickly as possible to give more borrowers breathing room so they can get out from under the burden of student loan debt, move on with their lives and pursue their dreams.”  

The initiative is the latest loan relief measure adopted by the Education Department after the Supreme Court stuck down Biden’s original student loan forgiveness plan last July that would have forgiven $400 billion in debt.  

Speaking to TIME, Cardona said that the new programme shows the Department of Education is “intentional about addressing disparities.”