Earlier this year, student loan borrowers were dealt a major blow when they learned that their outstanding educational debt would not be forgiven under President Biden's proposed plan. After a years-long pause, student loan payments have resumed this month. And millions of borrowers are no doubt scrambling to come up with the money to make those payments.
But while President Biden was not successful in broadly forgiving student loan debt, his administration was recently able to forgive the debt of 125,000 borrowers. Here's how.
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Relief has been coming in waves
While the Supreme Court ruled that President Biden could not broadly wipe out student debt for millions of borrowers, Biden has been able to forgive debt on a situation-by-situation basis. And recently, 125,000 Americans were approved to have their debt wiped out for a few reasons:
- 53,000 borrowers were eligible for student debt relief under Public Service Loan Forgiveness programs
- 51,000 borrowers were eligible for student debt relief through fixes to income-driven repayment plans
- 22,000 borrowers were eligible for student debt relief due to having a total or permanent disability rendering that debt unpayable
All told, more than $9 billion in student debt was wiped out across these 125,000 borrowers.
Are you eligible to have your student loans forgiven?
You might still be on the hook for student loan payments now. But thanks to the Biden Administration's Saving on a Valuable Education (SAVE) plan, relief may be on the way.
For one thing, your monthly loan payments may be lower under the SAVE plan since it allows your monthly payment obligations to be calculated based on your income and family size, as opposed to your loan balance itself. Also, you may be eligible for student loan forgiveness in a fairly short time period, depending on your loan balance.
Specifically, under the SAVE plan, you'll be eligible to have your student loan balance forgiven after making 120 payments, which is the equivalent of 10 years' worth. From there, for each additional $1,000 you borrowed, you need to make an additional 12 monthly payments to qualify for forgiveness.
Prior to the SAVE plan, you had to make payments on your student loans for 20 or 25 years to have that debt wiped out. So this shorter timeline most certainly benefits borrowers.
You might also qualify to have your student loans forgiven if you work for a government organization or a non-profit. Typically, under the Public Service Loan Forgiveness program, you'll be eligible to have your remaining debt wiped out after you've made 120 qualifying monthly payments, which is the equivalent of 10 years' worth.
Student loan borrowers aren't able to enjoy the broad relief President Biden was hoping to provide them with. And many borrowers will no doubt struggle to keep up with their loan payments in the coming months. But that doesn't mean you need to give up on having your debt forgiven. Instead, see if you're eligible for the SAVE plan or other loan forgiveness under an existing program.
