Student Loan Forgiveness Update: Biden Administration Cancels Debt for Another 160,000 Borrowers (2024)

FAQs

Student Loan Forgiveness Update: Biden Administration Cancels Debt for Another 160,000 Borrowers? ›

On Wednesday, the White House approved $7.7 billion in debt cancellation for more than 160,000 borrowers. This debt relief was tied to forgiveness programs, such as Public Service Loan Forgiveness, Saving on a Valuable Education and income-driven repayment plans.

Today's announcement brings the total loan forgiveness approved by the Biden-Harris Administration to $167 billion for 4.75 million Americans. Thanks to this Administration's efforts more than one out of every 10 federal student loan borrowers has now been approved for some debt relief.

Your loans should automatically qualify for forgiveness after you've spent 20 or 25 years in repayment. Reach out to your loan servicer about any steps you may need to take.

You may be eligible for income-driven repayment (IDR) loan forgiveness if you've have been in repayment for 20 or 25 years. An IDR plan bases your monthly payment on your income and family size.

Alert: A processing pause began on May 1, 2024, for the Public Service Loan Forgiveness (PSLF) Program as we update and streamline our systems for a better user experience. You can continue to submit your PSLF forms during this pause, and we will begin processing them when the update is complete.

However , when student loans are forgiven , it means that the borrower is no longer responsible for paying back the remaining balance of their loan . Instead , it is the responsibility of the government or a specific program to cover the cost of the loan .

Canceling student loan debt may add $109 billion on average to the annual GDP for the next 6 years. Canceling student loan debt may add up to 1.5 million new jobs. Student loan debt cancelation may lift up to 5.2 million American households out of poverty.

On April 4, 2024, the court issued further instructions to enjoin the rule and postpone the effective date of the regulation pending final judgment in the case. The injunction is effective until there is a final judgment in the case.

Research from EducationData.org shows that almost 45.3 million Americans hold an average federal student loan debt balance of $37,338. Combined, student loan debt in the U.S. adds up to nearly $2 trillion. According to the same data, the average student loan monthly payment is $503.

What is the save plan for July 2024? ›

Starting in July 2024, payments for borrowers with only undergraduate student loans will be cut in half. Those monthly payment amounts are currently calculated to be 10% of your discretionary income, but in July 2024 that number will drop to only 5% of your discretionary income.

Public Service Loan Forgiveness: Parents can have their loans forgiven after making 10 years' worth of monthly payments. Income-Contingent Repayment: Parents can have their remaining loan balance forgiven after making 25 years' worth of monthly payments.

The proposal would permit student debt forgiveness for borrowers with only undergraduate debt if they first entered repayment at least 20 years ago (on or before July 1, 2005), and borrowers with any graduate school debt would qualify if they first entered repayment 25 or more years ago (on or before July 1, 2000).

Borrowers who have reached 20 or 25 years (240 or 300 months) worth of eligible payments for IDR forgiveness will see their loans forgiven as they reach these milestones. ED will continue to discharge loans as borrowers reach the required number of months for forgiveness.

If you're a longtime borrower who has been in repayment for at least 20 or 25 years, you could get automatic loan forgiveness by September 2024. This is the result of a one-time program called the IDR account adjustment.

Starting in July 2024, payments for borrowers with only undergraduate student loans will be cut in half. Those monthly payment amounts are currently calculated to be 10% of your discretionary income, but in July 2024 that number will drop to only 5% of your discretionary income.

No opportunities for student loan forgiveness: If you're eligible to have your student loans forgiven after a certain amount of time based on your career, it doesn't make sense to repay your loans early. You're better off making your required payments until the debt is forgiven.