The Biden administration will start canceling student loans for some borrowers in February as part of a new repayment plan that's taking effect nearly six months ahead of schedule. Loan forgiveness was originally to begin in July under the new SAVE repayment plan, the AP reports, but it's being accelerated to provide relief to borrowers sooner, President Biden said Friday. The change is part of an effort "to act as quickly as possible to give more borrowers breathing room" and move on from their student debt, the president said in a statement.
Borrowers will be eligible for cancellation if they are enrolled in the new SAVE plan, if they originally borrowed $12,000 or less to attend college, and if they have made at least 10 years of payments. The Education Department said it didn't yet know how many borrowers will be eligible for cancellation in February. Biden announced the new repayment plan last year alongside a separate plan to cancel up to $20,000 in loans for millions of people. The Supreme Court struck down his plan for widespread forgiveness, but the repayment plan has escaped that level of legal scrutiny. GOP members of Congress failed to block the new repayment plan last year. Republicans called the accelerated forgiveness an attempt to win voters ahead of the presidential election.
The new repayment plan offers far more generous terms than several of the income-driven repayment plans it's meant to replace. Previous plans offered cancellation after 20 or 25 years of payments, while the new one offers it in as little as 10. It also lowers monthly payments for millions of borrowers. Those who took out more than $12,000 will be eligible for cancellation but on a longer timeline, per the AP. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years. The maximum repayment period is capped at 20 years for those with only undergraduate loans and 25 years for those with graduate school loans. The Biden administration said next month's relief will particularly help Americans who attended community colleges.
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