More Student Loan Forgiveness Announced

[ellipses84]

“Today, the Biden-Harris Administration announced that next month it will start providing forgiveness after as few as 10 years of payments for borrowers on the Saving on a Valuable Education (SAVE) Plan who originally took out $12,000 or less for college.”

www.ed.gov/news/press-releases/biden-harris-administration-shorten-path-debt-cancellation-some-save-borrowers

“Almost $44 billion in IDR relief for nearly 901,000 borrowers;

$53.5 billion for almost 750,000 borrowers through fixes to Public Service Loan Forgiveness that began in October 2021. By contrast, only about 7,000 borrowers had received forgiveness through these programs at the start of the Biden-Harris Administration.”

[ellipses84]

There’s still a lot of questions about the exact requirements, like will this be per each loan. I don’t think this will help a lot of people, but it will help some people who really need it, like those who had to drop out due to financial reasons or those who went to community college.

There’s also a lot of frustrating for those waiting for forgiveness but the stats show there has been a lot of forgiveness already! The courts denied the overall forgiveness plan and the administration is having to be creative with programs for forgiveness in smaller batches.

[heygrey]

Interesting! I think I took out less than $12k total in federal loans, I have just under $7k left. I have well over 10 years of payments. Maybe this will be it for me!

ETA: I looked up my original loan amounts - $11,800. Fingers crossed that this is it for me. 

[bee20]

This seems like a weird spot to draw a line given that average student loan debt at graduation hasn't been below $12k since 1995.  The article states that they picked it to target community college students but it seems like they could just come out and say that.  The rules are already different for undergrad vs. graduate loans.

I am glad that we are moving to a new repayment system instead of the one-time refund that just left kids entering school the next year screwed or dependent on another round of forgiveness. The SAVE program is in many cases more generous than the $10k spot refund and actually addresses the problem.

[heygrey]

Jan 12, 2024 23:58:29 GMT -5 bee20 said:

This seems like a weird spot to draw a line given that average student loan debt at graduation hasn't been below $12k since 1995.  The article states that they picked it to target community college students but it seems like they could just come out and say that.  The rules are already different for undergrad vs. graduate loans.

I attended a 4 year college and graduated with a bachelors in 2009. My total loan amount was upwards of $40k, but the Federal portion was under $12k. I couldn't tell you the logic or reason for how I got which loans, I was a first gen college student in my family with almost no help from high school guidance or college admissions, so my parents and I were flying blind. My parents tried to understand the interest rates and and make smart decisions, but mostly they were intent on co-signing loans to help me get to school. 

Since this is only considering the Federal portion of loans, I wonder if there are a more people in a situation like me. This seems like it will definitely help people who didn't complete a degree or who went through shorter programs, but I bet there are also a fair amount of people who didn't take out a lot of Federal loans for some reason. 

[EvieEthelGarland]

First year loan limits is $5500 and second year limits is $6500, so $12k will cover the first two years or community college.

What I find absolutely insane is that the limit for federal loans my senior year was also $5500. That was the 95/96 school year.

[gretchenindisguise]

Jan 15, 2024 11:59:50 GMT -5 EvieEthelGarland said:

First year loan limits is $5500 and second year limits is $6500, so $12k will cover the first two years or community college.

What I find absolutely insane is that the limit for federal loans my senior year was also $5500. That was the 95/96 school year.

Yes, the invention of parent plus loans has played a big role in the explosion of college costs. 

[heygrey]

Forgiveness isn't capped at $12k, it's just 10 years of payments = $12K, for every year of payments above 10 another $1k will be forgiven. This may not completely eliminate student loan debt, but it will reduce it for a lot of people.

"Borrowers enrolled in SAVE who have made at least 10 years of monthly payments and originally took out $12,000 or less for undergraduate or graduate postsecondary studies are eligible for forgiveness. For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. That means a borrower who originally borrowed less than $21,000 will be eligible for forgiveness faster than the 20-year timeline for undergraduate borrowers on SAVE."

[ellipses84]

Jan 15, 2024 12:20:00 GMT -5 gretchenindisguise said:

Jan 15, 2024 11:59:50 GMT -5 EvieEthelGarland said:

First year loan limits is $5500 and second year limits is $6500, so $12k will cover the first two years or community college.

What I find absolutely insane is that the limit for federal loans my senior year was also $5500. That was the 95/96 school year.

Yes, the invention of parent plus loans has played a big role in the explosion of college costs. 

That’s a good point. The loans taken out in my name were only about $20k for 4 years. The rest of mine were parent loans which I always paid and were thankfully forgiven via PSLF due to my mom who works in education. She also had her own student loans from finishing her bachelors and getting her masters degree as a working single mom before I went to college.

[kynct]

I'm just a lurker, but I'm wondering if anyone may be able to help me figure out if I would be eligible for this forgiveness, and if so what steps I should take.

I have two Direct loans that are both serviced by Mohela - one was originally for 3,500 and the other for 4,500. I graduated in fall of 2011 and repayment started in 2012. My payment was always pretty low so I never did an income-driven repayment plan. During the COVID forbearance period I stopped making payments, since loan forgiveness was such a hot topic in 2020 and they weren't gaining any interest. I started payments again when forbearance ended last year.

I've been wondering if I enrolled in SAVE I would possibly be eligible for forgiveness. I have about $2k left so not a ton, but $2k is $2k. It seems like the COVID forbearance years would possibly count towards the 10 years, and I'm under the $12k threshold. Would I need to consolidate my two loans even though they're the exact same type and servicer?

[gretchenindisguise]

Feb 15, 2024 15:19:16 GMT -5 kynct said:

I'm just a lurker, but I'm wondering if anyone may be able to help me figure out if I would be eligible for this forgiveness, and if so what steps I should take.

I have two Direct loans that are both serviced by Mohela - one was originally for 3,500 and the other for 4,500. I graduated in fall of 2011 and repayment started in 2012. My payment was always pretty low so I never did an income-driven repayment plan. During the COVID forbearance period I stopped making payments, since loan forgiveness was such a hot topic in 2020 and they weren't gaining any interest. I started payments again when forbearance ended last year.

I've been wondering if I enrolled in SAVE I would possibly be eligible for forgiveness. I have about $2k left so not a ton, but $2k is $2k. It seems like the COVID forbearance years would possibly count towards the 10 years, and I'm under the $12k threshold. Would I need to consolidate my two loans even though they're the exact same type and servicer?

If they are both direct and have the same repayment history, you don’t need to consolidate.

The covid years will count.

Did you have any periods afterwards where you were in school again or took forbearance? In school deferment won’t count. Some forbearance periods will.

It sounds like you just need to wait for things to be processed and you’ll be forgiven. If there is a chance you aren’t really at 10 years of then enroll in whatever income driven repayment plan is cheapest (likely SAVE but it may not be, you can compare estimated plans on fsa).

[heygrey]

Feb 15, 2024 15:19:16 GMT -5 kynct said:

I'm just a lurker, but I'm wondering if anyone may be able to help me figure out if I would be eligible for this forgiveness, and if so what steps I should take.

I have two Direct loans that are both serviced by Mohela - one was originally for 3,500 and the other for 4,500. I graduated in fall of 2011 and repayment started in 2012. My payment was always pretty low so I never did an income-driven repayment plan. During the COVID forbearance period I stopped making payments, since loan forgiveness was such a hot topic in 2020 and they weren't gaining any interest. I started payments again when forbearance ended last year.

I've been wondering if I enrolled in SAVE I would possibly be eligible for forgiveness. I have about $2k left so not a ton, but $2k is $2k. It seems like the COVID forbearance years would possibly count towards the 10 years, and I'm under the $12k threshold. Would I need to consolidate my two loans even though they're the exact same type and servicer?

There is zero reason not to enroll with SAVE. Worst case you still owe $2k and you continue to pay it off, best case it's forgiven. 

I only had two federal loans serviced by Navient, took forever to consolidate them and missed out on a lot of the Covid payment pause. I enrolled with SAVE and my payments dropped to $0 because of my income. In theory my loans will be forgiven after 20 years repayment which is another ~6 years. 

From what I've read, I think I qualify for this forgiveness because I borrowed less than the threshold initally. We'll see. 


I had some small complications with enrollment in SAVE because I live outside the US and it didn't like my address, but it was still really easy. I would highly recommend it to everyone because there doesn't seem to be a downside. 

[kynct]

gretchenindisguise, I've never had any other deferments or forbearance. I've just been paying the same $120 payment every month since 2012, until the COVID forbearance was instituted. The loans are the exact same type and repayment terms, and the one payment gets applied to both. 

heygrey,gretchenindisguise, thank you both so much! We didn't have much money when I graduated high school so I went to the cheapest state school that gave me a large scholarship, so I was lucky to only take out the $8k in loans. It seemed a little too good to be true that I might qualify for forgiveness now! Off to enroll in SAVE