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30 million student loan borrowers to get email about student debt forgiveness

Nearly 8 million borrowers are currently in forbearance amid legal challenges.
Joe Biden
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The Biden administration announced on Wednesday a new student debt relief regulation that would reduce or eliminate college debt for 30 million borrowers.

The new plan comes amid a battle between the White House and Republicans over the administration's ability to hand out debt relief for borrowers.

Starting on Thursday, the Department of Education will start emailing all outstanding federal student loan borrowers to inform them they have until Aug. 30 to opt out of the relief program. Receiving an email does not guarantee that specific borrowers will be eligible for student loan debt, the Department of Education said.

The White House said it will provide additional information on student loan relief to borrowers this fall once Department of Education rules are finalized.

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The Department of Education said that four groups of borrowers would benefit from the new plan:

  • Borrowers who owe more now than they did at the start of repayment
  • Borrowers who have been in repayment for decades
  • Borrowers who are otherwise eligible for loan forgiveness but have not yet applied
  • Borrowers who enrolled in low-financial value programs

Although the Biden administration had its proposal to broadly forgive up to $20,000 in student loan debt rejected by the Supreme Court, it has found other ways to offer more targeted relief. For instance, the White House touted that it provided relief to 946,000 public service workers due to fixes made to the Public Service Loan Forgiveness program.
There has also been $51 billion in relief provided for more than 1 million borrowers after the Department of Education made administration adjustments to income-driven repayment counts. Officials said that the adjustments have brought some borrowers closer to student loan forgiveness as those in income-driven repayment plans can have their loans forgiven after 20 years of payments.

“These latest steps will mark the next milestone in our efforts to help millions of borrowers who’ve been buried under a mountain of student loan interest, or who took on debt to pay for college programs that left them worse off financially, those who have been paying their loans for twenty or more years, and many others, U.S. Secretary of Education Miguel Cardona said in a statement. "The Biden-Harris Administration made a commitment to deliver student debt relief to as many borrowers as possible as quickly as possible, and today, as we near the end of a lengthy rulemaking process, we’re one step closer to keeping that promise.”

Why 8 million borrowers are in forbearance

Some of the Biden administration's broader student loan forgiveness plans have been blocked or altered by courts. Most recently, a pair of separate court decisionstemporarily stopped the Biden administration from enacting parts of the SAVE Plan, which has reduced or eliminated monthly payments for millions of federal student loan borrowers.

Earlier this month, a federal appeals court blocked the Biden administration from implementing the rest of the SAVE Plan.

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For many borrowers who didn't have their loans forgiven, they have had lower monthly payments through the SAVE Plan.

When the Biden administration first enacted the SAVE Plan last year, borrowers with only undergraduate loans began repaying loans at 10% of their discretionary income. What is considered discretionary income increased from 150% to 225% of the federal poverty level under Biden's order. The SAVE Plan also was scheduled to reduce the amount of discretionary income from borrowers from 10% to 5% in July.

The SAVE Plan provides some borrowers with lower income-driven repayments, while others forgive borrowers' loans outright.

The White House said that student loan borrowers enrolled in the SAVE Plan who have made payments for at least 10 years and originally took out up to $12,000 are eligible to have their loans automatically forgiven.

Additionally, the White House said for every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. That means someone enrolled in the SAVE Plan with an original debt of up to $21,000 would have their loans forgiven by the time they reach 20 years of payments.

Earlier this month, the Biden administration said that it would put 8 million enrollees of the SAVE Plan into forbearance until legal challenges are decided.

The Department of Education said that interest will not accrue during this forbearance and the forbearance period will not count toward Public Service Loan Forgiveness and income-driven repayment forgiveness.