Those eligible for loan forgiveness under the SAVE plan will have their balances cleared in February, months ahead of schedule.
Federal borrowers eligible for student-loan forgiveness under a repayment plan implemented last year will now be receiving their financial relief a few months ahead of schedule.
The Biden administration announced Friday that Americans enrolled in the SAVE plan who have qualified for cancellation will see their loans forgiven starting in February, six months earlier than expected. Under SAVE, also known as the Saving on a Valuable Education plan, borrowers who initially took out $12,000 or less in student loans and have been making payments for ten years will have their remaining balance wiped out. Starting this month, the U.S. Department of Education will notify eligible borrowers enrolled in the program that their loans will be forgiven automatically.
“This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans,” President Joe Biden said in a statement. “And, 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.”
The SAVE plan, first introduced in August 2023, bases payment amounts on a borrower’s family size and discretionary income. It was intended to replace the Revised Pay-As-You-Earn or REPAYE plan that was already in place. Loan forgiveness was initially expected to go into effect on July 1. As of this month, 6.9 million borrowers have enrolled in the program, according to a press release. It’s not clear how many people will have their loans forgiven in the coming weeks.
The rollout of the plan wasn’t as smooth as expected. The Consumer Financial Protection Bureau said in a report released this month that there were significant delays in the processing of applications to the SAVE plan, with 450,000 of them left unresolved for more than 30 days.
It was just last June when the U.S. Supreme Court voted 6-3 against Biden’s plan to cancel up to $20,000 of student-loan debt through the authority of the HEROES Act. Shortly after, millions of federal loan borrowers resumed making monthly payments in October following a three-year pause on payments and interest accrual due to the COVID-19 pandemic. Despite the Court’s rejection of its forgiveness plan, the administration reports that it has forgiven close to $132 million in debt for more than 3.6 million borrowers through other actions such as changes to the Public Service Loan Forgiveness program and to laws allowing those with a disability to discharge their loans.
