The U.S. Department of Education will discharge an additional $7.4 billion in student loan debt following approval Friday from President Joe Biden. The forgiveness will impact nearly 300,000 borrowers through the Saving on a Valuable Education (SAVE) Plan, changes to the income-driven repayment (IDR) forgiveness, and the Public Services Loan Forgiveness (PSLF) program.
“Today we are helping 277,000 borrowers who have been making payments on their student loans for at least a decade,” U.S. Under Secretary of Education James Kvaal said in a press release. “They have paid what they can afford, and they have earned loan forgiveness for the balance of their loan.”
A large majority of the borrowers in question – 206,800 — will have their debt discharged through the SAVE Plan, meaning they have been making at least 10 years of payments on a balance of $12,000 or less with an extra year added for each additional $1,000. The average debt per borrower forgiven through the SAVE plan is approximately $17,000.
By making changes to the IDR payment process, such as adjusting the use of forbearance by lenders, an estimated 65,800 borrowers will have, on average, $53,000 in loans forgiven — totalling $3.5 billion. The latest round of the PSLF program also saw the discharge of $300 million for 4,600 borrowers, which averages out to more than $65,000 per person forgiven.
A recent report by the Council of Economic Advisors suggests that student loan forgiveness could lead to an increase in homeownership, encourage entrepreneurship, reduce overall debt delinquency, and improve borrowers’ mental health.
“As long as there are people with overwhelming student loan debt competing with basic needs such as food and healthcare, we will remain in our pursuit to bring relief to millions across the country,” U.S. Secretary of Education Miguel Cardona said in a press release.
Since taking office, Biden’s administration has discharged approximately $153 billion in student debt accounting for nearly 4.3 million Americans, meaning that nearly 10% of borrowers have received some amount of relief.
