Thousands of borrowers nationwide, including about 1,600 in Connecticut, will see the remainder of their federal student loan debt forgiven if they qualify under a newer income-driven repayment plan.
After his broader student debt forgiveness plan was overturned by the U.S. Supreme Court last year, President Joe Biden has been looking for ways to take incremental steps to provide some relief without needing to go through a divided Congress.
Loan forgiveness for those using the Biden administration’s Saving on a Valuable Education Plan was initially planned for over the summer but was moved up by several months to late February. In total, 1,600 borrowers in Connecticut will see $13.7 million of student loan balances wiped out, with the potential for more who qualify in the coming months.
Eligible borrowers throughout Connecticut and around the country started to receive emails this week, addressed from Biden, about the cancellation. They are also expected to get notifications from their loan servicer when the debt forgiveness is being processed.
About 7.5 million people have enrolled since the SAVE program launched last summer. More than half are not required to make monthly payments if they earn under $32,800 annually. And if borrowers make those payments in full but cannot pay the accrued monthly interest, they will not be the hook for the unpaid interest.
The plan includes individuals who initially borrowed $12,000 or less to attend college and have paid off their federal loans for at least 10 years. For every additional $1,000 borrowed, they must make an additional year of payments before their loans can be discharged.
Through Biden’s latest executive action, 153,000 borrowers nationwide will see a total of $1.2 billion in forgiveness. The Education Department also plans to reach out next week to inform other borrowers that they are still eligible to enroll in the SAVE plan.
Biden will make adjustments to the SAVE program in July by reducing the amount that borrowers must pay to 5% of their discretionary income per month. And senior administration officials say they expect more people to become eligible for debt forgiveness soon.
“The SAVE plan reflects our unapologetic commitment to deliver as much relief as possible, to as many borrowers as possible, as quickly as possible,” U.S. Education Secretary Miguel Cardona said in a Thursday call with reporters.
“When we talk about opening access to higher education and not having it be a lifetime of debt, this is what we’re talking about,” added Cardona, the former commissioner of Connecticut’s Department of Education. “They demonstrate that we’re not going to stop fighting to make higher education more affordable and more accessible for more Americans.”
Biden made a campaign promise in 2020 to cancel student loan debt, though it was a more scaled-back version than what progressives in his party were seeking.
In August 2022, the president announced his plan to cancel at least $10,000 in federal student loan debt depending on a borrower’s annual income. The amount doubled to $20,000 specifically for those who received a Pell Grant. Most Pell Grant recipients are from families who earn less than $60,000 a year and require greater financial assistance to attend school.
About 321,000 Connecticut residents had applied for the program, with more than 208,000 of them fully approved for their debt to be discharged. But the program was halted after the Supreme Court ruled against it last June. That decision came months before student loan repayments were set to begin after the three-year-long pause.
Republicans in Connecticut and Washington agreed with the high court that Biden could not cancel student loan debt unilaterally. With Congress unlikely to pass legislation on the issue, Biden has relied on a number of executive actions and programs to provide smaller amounts of relief and restructure payment plans.
Previous student loan actions included the cancellation of debt for 300 people in Connecticut who were defrauded by ITT Tech, a for-profit college that is now shuttered. The administration discharged the loans for those who attended from Jan. 1, 2005 until the school closed down in September 2016.
Biden had also temporarily expanded eligibility for the Public Service Loan Forgiveness program, which has been in place for years to give major relief to those who work in the public sector. Those workers can have the remainder of their debt erased, regardless of the amount, if they have made payments for 10 years. A past waiver helped additional borrowers, with more than 110,000 in Connecticut estimated to qualify.
According to the White House, the administration has to date canceled a total of about $138 billion for nearly 3.9 million borrowers.
“To fix and adjust the programs, we had to change them to make people eligible. And that’s what I’ve done when the Supreme Court said I couldn’t go ahead and relieve all the debt,” Biden said in a speech earlier this week from Culver City, Calif.
“It helps everyone, not just the people whose debt is relieved. But when people with student debt are … relieved, they buy homes, they start businesses, they contribute,” he continued. “They engage in the community in ways they weren’t able to before. That actually grows the economy.”
