Ripping You Off: Biden Administration Announces $1.2 Billion Student Loan Debt Discharge

In a landmark move, the Department of Education revealed plans to automatically discharge $1.2 billion in federal student loans for 153,000 borrowers enrolled in President Joe Biden’s latest repayment initiative.

The announcement, made on February 21st, highlights the implementation of the new income-driven repayment (IDR) plan, known as SAVE, touted as the “most generous ever” by President Biden. To qualify for debt cancellation under the SAVE plan, borrowers must have been enrolled in the IDR program, made repayments for at least 10 years, and initially borrowed $12,000 or less for college.

Under the SAVE plan, for every $1,000 borrowed above the $12,000 threshold, borrowers become eligible for debt discharge after an additional year of repayments. For instance, individuals with an original principal balance of $13,000 can now have their remaining debt wiped out if they have been in repayment for 11 years.

This latest initiative follows President Biden’s efforts to pursue large-scale federal student loan debt cancellation, following the Supreme Court’s rejection of his initial $400 billion plan last summer. The administration recalibrated its approach, tasking the Education Department with crafting a new plan on a more legally sound basis, a process known as “negotiated rulemaking.”

According to the Education Department, over $138 billion in federal student loan debt has been canceled to date, benefitting more than 3.9 million borrowers. This includes borrowers on IDR plans, public sector workers, individuals with permanent disabilities, and those misled or defrauded by their schools.