The White House announced Wednesday that it is canceling $1.2 billion in student loans for nearly 153,000 people who borrowed $12,000 or less and have been repaying the money for at least 10 years.
“This shortened time to forgiveness will particularly help community college and other borrowers with smaller loans and put many on track to being free of student debt faster than ever before,” the administration said in a statement.
For a borrower to be eligible for this forgiveness, they must enroll in the federal government’s Saving on a Valuable Education (SAVE) Plan, have been making at least 10 years of payments and have originally taken out $12,000 or less for college. SAVE aims to protect borrowers from runaway interest and balances larger than what they originally took out, according to the U.S. Education Department (ED).
Related article: New debt-forgiveness plan will help community college students
The American Association of Community Colleges (AACC) will host a session at the upcoming 2024 Annual in April that will outline some of the new factors that may influence student choices concerning federal debt due to the SAVE plan.
About 7.5 million borrowers are now enrolled in SAVE, 4.3 million of whom have a $0 monthly payment, ED said. It added that it will implement the remaining full benefits of SAVE in July, which will further reduce monthly payments from 10% of a borrower’s discretionary income to 5%.
The administration noted that it is currently writing proposed regulations that would make more borrowers eligible for loan forgiveness and this week will hold another session of negotiated rulemaking to discuss a proposal to provide loan forgiveness for borrowers experiencing hardship.
