In 2022, the Biden-Harris administration announced its Student Loan Debt Relief plan, intended to forgive up to $20,000 in student loan debt per borrower. The White House estimated more than 90% of the relief would go to households making less than $75,000.6
However, the action was met with legal challenges. On June 30, 2023, the Supreme Court declared the program unconstitutional, forcing the Biden-Harris administration to pivot to new measures for student debt relief. […]
In response to the Supreme Court decision, the Biden-Harris administration announced the Saving on a Valuable Education (SAVE) plan. The new plan, which replaced the older REPAYE plan, includes several student debt relief measures, such as:
- Lowering monthly payments to 5% of discretionary income for undergraduate borrowers
- Raising the discretionary income threshold, which means an estimated one million borrowers will owe $0 per month because they do not make enough to have discretionary income
- Forgiving loan balances after 10 years of payments if the original loan balance was $12,000 or less
- Ending the capitalization of unpaid interest, which means student loan balances will never grow as long as borrowers keep current with their payments8
The COVID-19 moratorium on student loan payments and interest has come to an end. Interest began accumulating again on September 1, 2023, and the first student loan payments since the pandemic were due on October 1.
To help financially vulnerable borrowers, the White House also announced a payment “on-ramp” period from October 1, 2023, to September 30, 2024. Payments will be due during this time, and interest will accrue on student loan debt, but that interest will not capitalize at the end of the 12 months. Additionally, borrowers with late, missed, or partial payments will not be considered in default, reported to credit bureaus, or referred to collections agencies. […]
Other Debt Forgiveness Measures
Before the sweeping relief, targeted debt forgiveness had already taken effect for students who attended predatory or fraudulent schools. Students that attended several technical or vocational schools, such as ITT Technical Institute, may be eligible for federal loan forgiveness.11
On a broader scale, the Public Service Loan Forgiveness (PSLF) program allows those that work in public service positions to receive debt forgiveness after 120 qualifying payments while working in a nonprofit or government job. Income-based repayment programs also aim to lessen the monthly financial burden for low-income borrowers.