The Biden Administration on Friday introduced a new student loan forgiveness initiative targeting borrowers enrolled in the Saving on a Valuable Education plan.
Set to launch in February, this program automatically provides debt relief to those who have completed ten years of monthly payments with an original principal balance of $12,000 or less.
Approximately 7 million borrowers are currently enrolled in the SAVE plan, and this initiative is designed to assist low-income individuals and those who attended community college.
According to TIME, U.S. Secretary of Education Miguel Cardona emphasized the unique features of the SAVE Plan, stating, “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.”
Importantly, debt relief will be automatically applied to eligible borrowers’ accounts, eliminating the need for them to take any action.
For borrowers with a principal balance exceeding $12,000, forgiveness remains accessible over an extended timeframe.
This announcement follows the Supreme Court’s rejection of President Biden’s original student loan forgiveness plan last July, which aimed to erase $400 billion in debt.
The Biden Administration is concurrently pursuing similar relief through the Higher Education Act, although experts anticipate potential legal challenges for this initiative as well.
Secretary Cardona further encouraged borrowers to explore the SAVE plan, stating, “Today’s announcement gives borrowers an even greater reason to check out the SAVE plan and find out if they may qualify for earlier debt relief.”
