Biden Harris SAVE Plan Forgiveness

Biden-Harris Administration Approval of $1.2 Billion in Save Plan Forgiveness

Recently, the Biden-Harris administration released a State breakdown of about 153,000 borrowers who will receive $1.2 billion in forgiveness through the administration's Savings on a Valuable Education Plan. If you are one of those who will be receiving the benefit and forgiveness under the SAVE plan, we have detailed everything about eligibility and what it means.

Key Highlight

  • Recently, the Biden-Harris administration has published that nearly 153,000 borrowers will receive $1.2 billion in forgiveness under the SAVE plan.
  • To be eligible for this forgiveness, borrowers must be enrolled in the SAVE plan.
  • The benefit of the SAVE plan will be calculated on the original principal balance of all the federal loans.
  • Student debt is associated with individual hardships like bankruptcy, financial distress, and lower homeownership rates.

What is the SAVE Plan?

Later this year, President Biden introduced the SAVE plan, the most influential representative strategy to date. According to Save Plan, the monthly payments are based on the income of the borrower's family size and not the loan balance. This ensures that if borrowers meet their monthly payment obligation, their balance will remain the same due to unpaid interest. From July, undergraduate loan payments will be charged, limiting borrowers' monthly payments to 5% of their discretionary income. Till now, 7.5 million borrowers are enrolled in the SAVE plan, and 4.3 million have no monthly fee.

The Eligibility for SAVE Forgiveness

The eligibility criteria for forgiveness under the SAVE plan are as follows:

  • Enrollment in SAVE plan: The borrowers must be enrolled in the SAVE plan, a federal loan repayment plan.
  • Minimum of 10 years of payments: Borrowers must have made at least ten years of payments on their loans.
  • Original loan amount of $12,000 or less: The original loan amount should be $12,000 or less, and for every additional $1000 borrowed, the borrower becomes eligible for forgiveness after an extra year of payment.
  • Graduate school loans: Depending on whether borrowers have loans for graduate school, they can receive forgiveness after either 20 or 25 years.
  • Original principal balance: The benefit of the SAVE plan is calculated on the original principal balance of all the federal loans borrowed as a student rather than the current amount, which is the individual loan amount.
  • Automatic process: You do not need to take any action to receive relief, as the US Department of Education automatically initiates the forgiveness process.

What has the Biden-Harris administration done so far to relieve student debt?

The Biden-Harris administration has dedicated to relieving student debt, and it has benefited about 3.9 million Americans who have received $138 billion in cancellation. These borrowers mainly relied on forgiveness programs like Public Service Loan Forgiveness. The Biden-Harris administration has approved.

  • $156.7 billion for more than 793,000 for over through public service loan forgiveness.
  • $11.7 billion of relief for 513,000 borrowers through total and permanent disability charges like automatic discharges based on Social Security Administration data match.
  • $22.5 billion of relief for 1.3 million borrowers to discharges related to closed school borrowers, defense, and a court settlement.

Moreover, the Biden-Harris administration is drafting regulations to provide eligibility for loan forgiveness for the wider population. They are holding negotiations to consider a proposal for providing relief to borrowers experiencing hardships as a part of their ongoing efforts following the Supreme Court's rejection of the original student relief plan.

What does student debt mean for borrowers and non-borrowers?

Student debt is associated with individual hardships like bankruptcy, financial distress, lower homeownership rates, stress in family relationships, and even delays in family formation. However, the effects of student debt are experienced not only by individuals who have it but also by non-borrowers. The high level of student-to-income ratio has caused a reduction in state-level consumption. Also, the increasing student crisis increases the racial wealth gap.

In favour and against Student debt forgiveness

In Favour of Student Debt Forgiveness

  • Increase mobility income and GDP: Forgiving student debt can positively impact individuals and communities, increasing geographic mobility, income, and GDP.
  • Decreasing racial wealth gap: Forgiveness may help in reducing the racial disparities in wealth as from research, it was found that black borrowers have higher levels and default rates than white bar hours. Student debt forgiveness will help in removing the barriers to wealth accumulation.
  • Reducing financial strain: For marginalized groups, student debt can significantly affect their personal finances and limit their asset allocation. Student debt forgiveness can reduce this strain and help in wealth building.

Against student debt forgiveness

  • Overstated loan balance: The loan balance of low-income individuals may overstate the value of future payments and other options like income-driven repayment plans, which can be more effective and progressive.
  • Moral hazard and price increase: Forgiving debt might create a moral hazard for future borrowers and incentivize higher education institutions to increase prices.
  • Unfair forgiveness: The student loan debt forgiveness plan is unfair as it does not apply to previous debt holders who have already paid off their student loans. It means it conflicts with the main aim of providing fairness in student debt.


The Biden-Harris administration has introduced the SAVE plan to relieve millions of borrowers across the United States. The plan aims to provide equitable and flexible repayment options with the hope of unburdening students with loans. The recent announcement of forgiving $1.2 billion to 153,000 borrowers is the administration's commitment to relieving the students from debt and reducing their financial hardships. If you are enrolled on the SAVE plan, good news is coming.


What is public service loan forgiveness?

Public service loan forgiveness allows qualifying federal student loans to be forgiven if they have made 120 qualifying payments while working for a qualifying public service employer. If an individual has worked in public services, such as in government or a certain non-profit organization, they might be eligible for public service loan forgiveness.

What is income-given repayment forgiveness?

Most federal student loans are eligible for at least one incomplete repayment plan, whereas the income-driven repayment plan keeps your monthly payment based on your income and family size. If your income is low, your monthly payment could be as low as $0.

How does the forgiveness process work under the save a plan? 

Under the SAVE plan, borrowers do not need to take any action as the US Department of Education initiates the forgiveness process automatically. If you meet the eligibility criteria, your loan will be forgiven based on the original principal balance of the federal loans you borrowed as a student.

What are the different repayment periods for income-driven repayment plans?

The different repayment periods for income-driven repayment plans are

  • Saving on a Valuable Education Plan Save Plan (SAVE).
  • Pay As You Earn (PAYE).
  • Income Based Repayment (IBR).
  • Income Contingent Repayment (ICR).

Win Harrison 25 Feb, 2024


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