Student Loans: Here Are the 4 Added Steps Needed To Qualify for Biden’s Latest Forgiveness
Written by
Adam Palasciano
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Nicholas Morine
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A few days ago, the Biden administration announced that starting next month, the Education Department will fast-track student loan forgiveness for those who qualify under the Saving on a Valuable Education (SAVE) plan, which is an income-driven repayment (IDR) plan. The forgiveness was originally slated to start in summer 2024 but is coming sooner for many borrowers.
The department will start providing forgiveness after as few as 10 years of payments for borrowers on the new Saving on a Valuable Education (SAVE) Plan — at least, that’s the timeline for those who originally took out $12,000 or less for college. The Biden administration has touted this plan as “the most affordable repayment plan ever created,” according to CNBC.
In February, the department will start notifying borrowers on the SAVE plan who are eligible for forgiveness that their loans are being discharged automatically with no action needed on the borrower’s part. Additionally, they’ll also be emailing borrowers not on SAVE who can receive forgiveness immediately upon signing up for the plan.
“Our ability to deliver this relief to borrowers months ahead of schedule is a testament to the Biden administration’s commitment to delivering relief to as many borrowers as possible, as quickly as possible, explained U.S. Secretary of Education Miguel Cardona. “Today’s announcement gives borrowers an even greater reason to check out the SAVE plan and find out if they may qualify for earlier debt relief.”
How To Qualify For Forgiveness Under the SAVE Plan
If you’re already enrolled in the SAVE plan, there’s no further action needed on your part. If you qualify, the forgiveness should be automatic. Here are a few SAVE plan highlights:
- The SAVE plan effectively reduces the monthly federal student loan payments for undergraduate borrowers from 10% of discretionary income to 5%.
- Single borrowers who earn less than $32,800 per year or those in a family of four making less than $67,500 have a $0 monthly payment.
- A borrower’s balance will never grow due to unpaid interest as long as they are making their monthly payments.
- The timeline for forgiveness for those with small balances is shortened from the usual required 20 years or 25 years.
As mentioned, if you took out $12,000 or less in federal student loans during your undergraduate or graduate studies, you’ll get any remaining debt erased after just a decade. However, the payment term required for forgiveness increases by one year for each additional $1,000 above $12,000 that you borrowed.
Additional Steps To Take To Qualify For SAVE Student Loan Forgiveness
For many borrowers, this forgiveness will be automatic. For others, further action is needed. Here are additional steps that you can take now to ensure that you receive forgiveness under the SAVE plan if you qualify:
- Make Sure To Enroll in the SAVE Plan: If you aren’t enrolled already, you’ll need to enroll in the SAVE plan to be eligible for this type of student loan forgiveness.
- Find Out Which Type of Student Loans You Have: Check what type of student loans you may have before you try to enroll. In most cases, only Direct loans qualify for the SAVE plan. These include Direct unsubsidized, Direct subsidized, and Direct PLUS loans.
- Consolidate Your Existing Federal Student Loans Into Direct Loans: If you have student loans that don’t qualify for forgiveness under the SAVE plan, you may be able to consolidate your loans into a Direct loan to then qualify for forgiveness. After that, you’ll be able to enroll.
- Enroll in the Fresh Start Program if You Have Defaulted Federal Student Loans: The Education Department’s Fresh Start Program allows borrowers a one-time offer to bring their loans back to “in repayment” status. Defaulted student loans are not eligible for the SAVE plan, so this step is crucial.
You should also explore other student loan forgiveness options that you may already be eligible for first. For example, if you’re working full-time for the government or a qualifying non-profit organization, you are eligible for the Public Student Loan Forgiveness (PSLF) Program. You’ll receive student loan forgiveness of your remaining balance after you’ve made the equivalent of 10 years (or 120 student loan payments) under this program.
If you think you might qualify for any sort of forgiveness under any plan or program, be sure to do your research and take action. You could reduce your monthly payments or eliminate your student loan debt altogether.
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