Student loans to be canceled sooner for some borrowers

WASHINGTON — 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 set to begin in July under the new SAVE repayment plan, but it’s being accelerated to provide faster relief to borrowers, President Joe Biden said Friday.

It’s part of an effort “to act as quickly as possible to give more borrowers breathing room” and move on from their student debt, he 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 immediately know how many borrowers would 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 Americans. The Supreme Court struck down his plan for widespread forgiveness, but the repayment plan has so far escaped that level of legal scrutiny. Republicans in Congress, who called the new repayment plan an attempt to win voters ahead of the 2024 presidential election, tried unsuccessfully to block it through legislation and a resolution last year.

The new repayment plan offers far more generous terms than several other income-driven repayment plans that it’s meant to replace. Previous plans offered cancellation after 20 or 25 years of payments, while the new plan offers it in as little as 10. The new plan 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. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years.