ATLANTA — Following a defeat at the Supreme Court in their attempt to enact a major student debt relief plan, the Biden administration is moving forward with alternative plans that could alleviate the debt loads of many borrowers.
In a move announced Friday, the administration said it would discharge $39 billion in student debt for 804,000 borrowers in the coming weeks
The U.S. Department of Education, in a release, framed it as a correction to the way the monthly payments for income-driven repayment (IDR) plans are calculated. In some such plans, remaining debt may be forgiven after payments have been made for 20 or 25 years of qualifying months.
Secretary of Education Miguel Cardona said in a release the correction was needed for a "broken system that failed to keep accurate track of their progress towards forgiveness."
Here's what it means for Georgia borrowers:
Latest Biden student loan forgiveness plan & what it means for Georgia
Types of borrowers eligible for plan announced Friday:
- Those with Direct Loans
- Those with Federal Family Education Loans
If those loans are still held by the Department of Education, they may now have new credit for the time period they've been being repaid and may now have reached "necessary forgiveness threshold as a result of receiving credit toward IDR forgiveness." New credit for monthly qualifying will be applied to:
- Any month in which a borrower was in a repayment status, regardless of whether payments were partial or late, the type of loan, or the repayment plan;
- Any period in which a borrower spent 12 or more consecutive months in forbearance;
- Any month in forbearance for borrowers who spent 36 or more cumulative months in forbearance;
- Any month spent in deferment (except for in-school deferment) prior to 2013; and
- Any month spent in economic hardship or military deferments on or after January 1, 2013
How many people in Georgia could this affect?
According to federal data as of March 31, Georgia had roughly 367,000 borrowers holding $24.8 billion in debt on IDR plans who could be affected by this plan.
There were also 1.607 million borrowers in Georgia holding $65 billion in debt in Direct Loans.
When is this forgiveness happening?
It can begin happening immediately, because it's a recalculation of existing payment structures and crediting people for months they've held their loans and been paying them off that weren't previously calculated.
For instance, under your repayment plan, you may have previously been credited with 19 years of monthly payments even though you've held your loans for, say, 21 years. This plan is newly crediting months that weren't previously counted, which means your 19 years of credit jumps up, possibly bringing you to the 20-year threshold for full forgiveness.
I heard about the plan to make monthly payments $0, what about that?
That was actually announced last year and is known as the SAVE Plan.
See more here: Biden's student loan plan cuts payments to $0 for millions, others will be forgiven in 10 years
The SAVE Plan is different from Friday's announcement, but will also work to relieve student debt loads.
It is a new form of income-driven repayment (IDR) plan and the government says it will "provide the lowest monthly payments of any IDR plan available to nearly all student borrowers."
It involves:
- Raising the income exemption from 150% of the poverty line to 225%
- Eliminating remaining interest for loans after you start on the SAVE Plan
- Excludes your spouse's income if you are married and file taxes separately
Regarding the income exemption:
If you are a single borrower making $32,800 or less a year, or if you are part of a family of four making $67,500, your loan payments will be $0. If you start to make more money than that threshold, of course, you will need to begin making larger payments.
There are currently four types of IDR plans:
Revised Pay As You Earn Repayment Plan (REPAYE Plan)
Pay As You Earn Repayment Plan (PAYE Plan)
Income-Based Repayment Plan (IBR Plan)
Income-Contingent Repayment Plan (ICR Plan)
According to the government, if you're on the REPAYE Plan you'll be automatically started on the SAVE Plan once it becomes available.
If you apply for an IDR right now and select the REPAYE Plan, that will also become the SAVE Plan automatically.
An application specifically for the SAVE Plan will be available alter in the summer. The government says you may also directly contact your loan servicer to inquire about the SAVE Plan.
When is the SAVE Plan going live?
According to the government, later this summer.
News happens fast. Download our 11Alive News app for all the latest breaking updates, and sign up for our Speed Feed newsletter to get a rundown of the latest headlines across north Georgia.