Democrat President Joe Biden has wiped even more student debts for millions of college-educated voters ahead of the looming 2024 election.
On Friday, Biden announced that federal student loans would be canceled for borrowers who received less than $12,000.
If the borrower has been in repayment for the past decade, the debt will be wiped, courtesy of the American taxpayer.
In a statement, Biden said, starting in February, federal loan borrowers “who took out less than $12,000 in loans and have been in repayment for 10 years will get their remaining student debt canceled immediately.”
The plan was originally set to begin in July but is going into effect six months earlier.
It applies to borrowers enrolled in the new income-driven repayment plan known as the Saving on a Valuable Education (SAVE) plan.
“This action will particularly help community college borrowers, low-income borrowers, and those struggling to repay their loans,” Biden said in his statement.
“It’s part of our ongoing efforts to act as quickly as possible to give more borrowers breathing room so they can get out from under the burden of student loan debt, move on with their lives, and pursue their dreams.”
Biden announced the new repayment plan last year alongside a separate plan to cancel up to $20,000 in loans for millions of Americans.
The Supreme Court struck down his plan for widespread forgiveness.
Nevertheless, the repayment plan has so far escaped that level of legal scrutiny.
Republicans in Congress tried unsuccessfully to block the new repayment plan through legislation and a resolution last year.
Many borrowers began repaying federal student loans in October after a pause of more than three years.
The SAVE plan offers far more generous terms than several other income-driven repayment plans that it’s meant to replace.
Previous plans offered cancellation after 20 or 25 years of payments.
However, the new plan offers it in as little as ten years.
The new plan also lowers monthly payments for millions of borrowers.
According to the White House, there are 30 million people eligible for the SAVE plan, with 6.9 million currently enrolled.
Those who took out more than $12,000 will be eligible for cancellation but on a longer timeline.
For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of ten years.
The maximum repayment period is capped at 20 years for those with only undergraduate loans and 25 years for those with any graduate school loans.
The Biden administration says next month’s relief will particularly help American voters who attended community colleges, which generally cost less than four-year universities.
Education Secretary Miguel Cardona said the plan aims to place community college students “on a faster track to debt forgiveness than ever before.”
Republicans have railed against the new repayment plan, however.
They argue that the plan helps wealthier voters with college degrees at the expense of taxpayers who didn’t attend college.
Some say it’s a backdoor attempt to make community college “free.”
The socialist-style college scheme is an idea that Biden campaigned on but that failed to win support in Congress.
Starting next month, the Education Department says it will automatically wipe away balances for eligible borrowers enrolled in the SAVE plan.
The department will email borrowers who might be eligible but have not enrolled.
Some of the plan’s provisions took hold last summer – it prevents interest from snowballing as long as borrowers make monthly payments, and it makes more Americans eligible to get their monthly bill lowered to $0.
Other parts are scheduled to take effect in July, including a change to limit borrowers’ payments to 5% of their discretionary income.
The figure is down from 10% in previous income-driven repayment plans.
The Biden admin is separately pursuing another plan for widespread cancellation.
After the Supreme Court rejected Biden’s first plan, he asked the Education Department to try again under a different legal authority.
The department has been working on a new proposal that would provide relief to targeted groups of borrowers.
