Under the Biden administration’s $39 billion debt relief plan, more than 19,000 Hoosiers who borrowed federal student loans will have their remaining debt forgiven.
This is supported by the new US Department of Education data, which revealed the number of borrowers who qualified for automatic loan relief and was made public on Tuesday. The change is part of a solution to the agency’s mismanagement of its income-driven repayment (IDR) arrangements.
Many long-term creditors, including those who had made payments for 20 years or more, were denied assistance under the repayment programs. Qualified payments were made but not recorded.
According to federal officials, the total debt eligible for forgiveness in Indiana is more than $932 million.
A different approach to student loan forgiveness
Last Monday, the Education Department and the White House declared that over 800,000 students across the country will receive debt relief within the next 30 days.
The news came after the Supreme Court ruled in late June rejecting the Biden administration’s student debt relief program, which would have erased up to $20,000 in student loan debt for some borrowers.
Borrowers with Direct Loans or Federal Family Education Loans maintained by the education department (including Parent PLUS loans of either type) who have achieved a forgiveness level defined by the department are eligible under the Biden administration’s forgiveness plan.
Borrowers, including those under the Biden administration, who have accrued the equivalent of 20 or 25 years of qualifying months, depending on their loan type and IDR plan, are eligible for forgiveness.
The Biden administration, federal education officials, also stated that borrowers who meet the applicable forgiveness requirements but are not yet eligible for forgiveness will be identified and notified every two months until next year.
More Savings On The Way?
The Biden administration is about to launch a separate, complex new repayment plan dubbed the SAVE plan, which will save borrowers hundreds of dollars by keeping their monthly payments low (as low as $0) while simultaneously avoiding interest from inflating what they owe.
Monthly payments would be reduced to 5% of a borrower’s income under the new proposal, down from 10%, and the repayment timetable for loan forgiveness would be reduced to 10 years, down from 20 or 25 if the initial loan is less than $12,000.
Borrowers earning less than $15 per hour will not be required to make any payments. According to the Biden administration, anyone earning more than that level will save more than $1,000 per year on their payments when compared to other IDR programs.
The Biden administration has canceled around $116 billion in student loan debt for borrowers who were deceived by for-profit colleges, borrowers with disabilities, and those with debts under Public Service Loan Forgiveness.
More than 43 million Americans have student loan debt, and the Federal Reserve estimates that the total student loan debt in the United States exceeds $1.76 trillion.