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Biden Cancels Even More Student Debt

President Joe Biden announced on Friday that federal student loans will be wiped out for borrowers who received less than $12,000 and have been in repayment for the past decade.

Starting in February federal loan borrowers ‘who took out less than $12,000 in loans and have been in repayment for 10 years will get their remaining student debt cancelled immediately,’ Biden said in a statement.

The plan was originally set to begin in July but is going into effect six months earlier. applies to borrowers enrolled in the new income-driven repayment plan known as Saving on a Valuable Education plan (SAVE).

‘This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans,’ Biden said in his statement.

‘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.’

Biden announced the new repayment plan last year alongside a separate plan to cancel up to $20,000 in loans for millions of Americans. The Supreme Court struck down his plan for widespread forgiveness , but the repayment plan has so far escaped that level of legal scrutiny. Republicans in Congress tried unsuccessfully to block the new repayment plan through legislation and a resolution last year.

Many borrowers began repaying federal student loans in October after a pause of more than three years.

The SAVE plan offers far more generous terms than several other income-driven repayment plans that it´s meant to replace. Previous plans offered cancellation after 20 or 25 years of payments, while the new plan offers it in as little as 10. The new plan also lowers monthly payments for millions of borrowers.

There are 30 million people eligible for the SAVE plan, with 6.9 million currently enrolled, according to the White House.

Those who took out more than $12,000 will be eligible for cancellation but on a longer timeline. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years.

The maximum repayment period is capped at 20 years for those with only undergraduate loans and 25 years for those with any graduate school loans.

The Biden administration says next month’s relief will particularly help Americans who attended community colleges, which generally cost less than four-year universities.

The plan aims to place community college students ‘on a faster track to debt forgiveness than ever before,’ Education Secretary Miguel Cardona said.

Counterintuitively, those with smaller student loan balances tend to struggle more. It’s driven by millions of Americans who take out student loans but don’t finish degrees, leaving them with the downside of debt without the upside of a higher income.

Republicans have railed against the new repayment plan, saying it helps wealthier Americans with college degrees at the expense of taxpayers who didn’t attend college. Some say it’s a backdoor attempt to make community college free, an idea that Biden campaigned on but that failed to win support in Congress.

Starting next month, the Education Department says it will automatically wipe away balances for eligible borrowers enrolled in the SAVE plan. The department will email borrowers who might be eligible but have not enrolled.

Some of the plan’s provisions took hold last summer – it prevents interest from snowballing as long as borrowers make monthly payments, and it makes more Americans eligible to get their monthly bill lowered to $0.

Other parts are scheduled to take effect in July, including a change to limit borrowers´ payments to 5% of their discretionary income, down from 10% in previous income-driven repayment plans.

The Biden administration is separately pursuing another plan for widespread cancellation.

After the Supreme Court rejected Biden’s first plan, he asked the Education Department to try again under a different legal authority. The department has been working on a new proposal that would provide relief to targeted groups of borrowers.

READ 26 COMMENTS
  • Michael says:

    I thought congress has the power of the purse, use it ! Cut education budget until Crooked Joe stops his buying votes with taxpayer money. Stop paying for illegals anything that is not paid for American citizens like college.

  • Patriot says:

    Sorry folks but I disagree with eliminating payments from Student Loan Debt. It the government would stop giving scholarships to illegals and immigrants our students wouldn’t have so much debt.
    I paid as I went and graduated from college with a MS degree. I worked full time and went at night. Took me 12 years to get a MS degree but I got it. Easy? NO Worth It? YES

  • Pinks says:

    FJB and his unconstitutional administration
    Vote every last POS demon rat out of office.

  • Jakeysmom says:

    Nice re-election move… SMH

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