The Biden administration has begun the process of creating a new plan for widespread loan cancellation and implementing the SAVE Plan, which will cut monthly payments to $0 for millions of borrowers. There will also be a 12-month “on-ramp” period to ease borrowers back into making payments.
For many borrowers, qualifying monthly payments that should have moved them closer to forgiveness were not accounted for, effectively forcing them to make extra payments under their IDR plans.
Nationwide, more than 45 million people owe $1.6 trillion in federal loans for college, according to government data, and as many as 43 million of them stood to benefit from the cancellation program.
About 90% of the benefits from Biden's plan will go to families earning less than $75,000 according to the White House, but a group of Republican-led states have sued to block it.
Prior to this move, student loan debt—unlike credit card bills, medical bills, and most other forms of debt—was not eligible to be automatically wiped away when a person filed for bankruptcy.
