Biden Cancels $1.2B in Student Loan Debt. What To Know

Student loan forgiveness written on chalkboard — (Image credit: Getty Images)

The Biden administration has forgiven another $1.2 billion in student loan debt for about 153,000 borrowers enrolled in the Saving on a Valuable Education (SAVE) repayment plan.

To be eligible for this debt relief, SAVE enrollees must have been making at least 10 years of payments on a federal student loan of $12,000 or less, the Department of Education (DOE) said.

Eligible borrowers should have begun to receive emails this week from President Joe Biden letting them know that their loans are forgiven and that they will not need to take any further action to receive relief. Next week, the DOE plans to begin to email borrowers who can become eligible for loan cancellation if they switch to the SAVE plan.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

https://cdn.mos.cms.futurecdn.net/flexiimages/y99mlvgqmn1763972420.png

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

This part of the plan was originally set for implementation in July but the administration announced last month that it would accelerate the timeline. The DOE said it will implement the remaining benefits of the plan, however, in July.

Launched last August, the SAVE student loan plan is an income-driven repayment (IDR) plan that calculates a borrower’s monthly payment using monthly income and family size as key determiners.

The latest action brings the administration's total student debt cancellation, under various programs, to almost $138 billion for nearly 3.9 million borrowers. This includes $4.8 billion in loan forgiveness for roughly 80,000 Americans in December 2023 as well as $9 billion in loan forgiveness for about 125,000 Americans in October 2023 — both through fixes to IDR and Public Service Loan Forgiveness programs.

President Joe Biden launched the program following the Supreme Court's decision last June to reject his sweeping $400 billion student loan debt relief plan, a key part of his campaign promise to help borrowers get out of debt. Last October, federal student loan payments resumed after a three-year, pandemic-induced hiatus.

The DOE's Federal Student Aid Office offers a step-by-step guide on repaying student loans with tips including how to review your loan balance, choose a repayment plan based on your income as well as various loan forgiveness options.

Other government resources include the DOE's Benefits.Gov, which a wealth of information on various loan programs offered by the federal government.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.

With contributions from