The Biden-Harris Administration has announced that certain borrowers will soon start receiving debt cancellation after only 10 years in repayment, instead of the previous requirement of 20 to 25 years.
Beginning in February, borrowers enrolled in the Saving on a Valuable Education (SAVE) Plan who originally took out $12,000 or less in federal student loans will have any remaining balance on their loans canceled after 10 years of qualifying time in repayment. Borrowers who borrowed more than $12,000 may also benefit, with one additional year in repayment added for every additional $1,000 borrowed, up to a maximum of 20 years for undergraduate loans or 25 years for graduate loans.
Borrowers who made payments after they were eligible for forgiveness will receive a refund of those amounts. The Department of Education has provided an FAQ with more details about how this program will work here.
What do borrowers need to do to benefit?
Borrowers already enrolled in SAVE do not need to do anything other than remain in the program and continue making any required monthly payments. Once they reach the required amount of time in repayment, the Department will cancel the remaining balance. Borrowers will receive an email and/or letter when this happens.
Borrowers not enrolled in SAVE should do so in order to benefit from the new timeline to loan cancellation. Borrowers with different loan types can enroll in SAVE as follows:
- Borrowers with Direct Loans taken out for their own education can enroll in SAVE directly. Enroll online at studentaid.gov/idr or by calling their student loan servicer for assistance with enrolling in SAVE.
- Borrowers with older federal student loan types can enroll in SAVE by consolidating their loans into a Direct Consolidation Loan and requesting to repay it using SAVE.
If possible, consolidate by the end of April 2024 to be included in the one-time account adjustment and get more of your time in repayment counted toward loan forgiveness.
- Borrowers with loans in default can take advantage of the Fresh Start program to get out of default and enroll in SAVE.
Unfortunately, Parent PLUS borrowers are generally not eligible for SAVE, although they may be able to access the plan for a limited time through a more complicated workaround (see here for more).
What time counts toward the 10 years?
Thanks to the Administration’s one-time payment count adjustment, past time in repayment between July 1, 1994 and now will be counted as qualifying time toward loan forgiveness in the SAVE plan.
- All time in repayment, regardless of payment plan, will be counted.
- All time between March 2020 and September 2023, when payments were paused due to the pandemic, will also be counted.
Additionally, some prior time in deferments and forbearances will count.
After the one-time payment count adjustment is completed in roughly July 2024, borrowers will generally need to make payments in an IDR plan to continue accruing more time toward forgiveness.
