This post was updated July 16 at 5:21 p.m.
The Biden-Harris Administration announced Friday that more than 804,000 borrowers will receive up to $20,000 in student loan debt forgiveness – totaling over $39 billion – in the coming weeks.
The Department of Education detailed a plan to further extend the debt repayment pause and cancel debt for some borrowers after amending several administrative discrepancies and miscalculations that resulted in increased loan lengths and prices at the end of June. This readjustment, called the Saving on a Valuable Education plan, is an income-driven repayment plan that uses total income and family size to calculate required monthly loan payments. Borrowers earning under 225% of the federal poverty level, or about $15.50 an hour – the current federal minimum wage – will not be required to make monthly payments, according to a White House statement.
After making 240 monthly payments for undergraduate studies or 300 monthly payments for graduate studies – the equivalent of 20 years and 25 years – under this new plan, borrowers will be forgiven up to $20,000 if they received Pell Grants and up to $10,000 if they did not. The plan will be implemented in summer, prior to when the COVID-19 repayment halt officially ends in October, with over 800,000 borrowers already qualifying. The White House statement said borrowers who have yet to reach this threshold can be forgiven as well, as Biden’s SAVE plan will forgive loans with an original balance of $12,000 or less after 10 years rather than 20.
This debt relief plan was created after the Supreme Court denied Biden’s one-time debt relief plan, according to the White House statement.
[Related: Supreme Court rules against Biden’s plan to forgive student loans]
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