6.9 Million to See Student Debt Vanish Under Biden

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• The Biden administration's new loan forgiveness applies to borrowers who took out less than $12,000 in loans and have been in repayment for 10 years, under the Saving on a Valuable Education (SAVE) plan.
• There are 30 million people eligible for the SAVE plan, with 6.9 million currently enrolled. This policy aims to particularly assist community college borrowers, low-income individuals, and those facing challenges in loan repayment.
• The plan, originally set to begin in July, is being implemented six months earlier, offering more generous terms than previous income-driven repayment plans.

In a significant move, President Joe Biden announced that federal student loans will be canceled for borrowers who have taken out less than $12,000 and have been repaying for a decade. This decision, starting in February, is part of the newly introduced income-driven repayment plan known as the Saving on a Valuable Education (SAVE) plan. The initiative, which will begin six months earlier than planned, is seen as a crucial step in assisting community college students, low-income earners, and those struggling with loan repayments.

The SAVE plan replaces several existing repayment plans, offering more favorable terms. Under this scheme, loan cancellation is available after 10 years of payments, a significant reduction from the previous 20-25 years requirement. Monthly payments for millions of borrowers are also expected to be lower.

The Biden administration's approach comes in the wake of the Supreme Court's rejection of a broader loan forgiveness plan. Despite this setback, the administration is continuing to seek ways to provide student debt relief. This particular plan has not faced the same level of legal challenges as the broader forgiveness initiative.

Critically, the plan aims to address the disproportionate struggles of those with smaller loan balances, often a result of not completing degrees, thus experiencing the burden of debt without the benefits of higher income. Republicans have criticized the plan, arguing it unfairly benefits those with college degrees at the expense of taxpayers who did not pursue higher education. Despite these criticisms, the Education Department will begin automatically clearing balances for eligible borrowers enrolled in the SAVE plan from next month.

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