Here’s how many Californians will see piece of $1.2 billion in student loan forgiveness
Nearly 153,000 student loan borrowers across the country — and thousands of Californians — will see a piece of $1.2 billion in federal debt forgiveness.
On Friday, the U.S. Department of Education released a state-by-state breakdown of borrowers receiving forgiveness under the Saving on a Valuable Education plan.
Borrowers should have been notified Wednesday through emails from President Joe Biden.
Loan servicers began processing the debt relief on Friday, and borrowers should see the forgiveness in their accounts in the coming weeks, according to the department.
“When we talk about fixing a broken student loan system, this is what we’re talking about,” U.S. Secretary of Education Miguel Cardona said in a Friday news release. “The state-by-state SAVE Plan debt forgiveness numbers we’re announcing today not only show that President Biden’s leadership is making a real impact on people’s lives in every state — they demonstrate that we won’t ever stop fighting to make higher education more affordable and accessible for more Americans.”
Who will get student loan forgiveness in California?
The Education Department reported 13,580 Californians will see $114.8 million in debt forgiveness.
To qualify, they must be one of the 7.5 million student loan borrowers enrolled in the SAVE plan. They don’t have to take any action to see forgiveness.
Borrowers can sign up by going to StudentAid.gov/SAVE.
The Biden administration said it has approved debt cancellation for nearly 3.9 million borrowers to date, forgiving debts totaling almost $138 billion.
How does SAVE plan debt forgiveness work?
The Biden administration announced in January that it would provide forgiveness sooner than it planned for borrowers on the SAVE plan who have made at least 10 years of payments and originally took out $12,000 or less for college. That change was supposed to go into effect in July.
The SAVE plan was introduced in 2023 and replaced the Revised Pay As You Earn plan.
The SAVE plan, which the White House calls the “most affordable repayment plan ever created,” is a type of income-driven repayment plan.
Payments under that plan are based on your income and family size, according to the Office of Federal Student Aid.
It shields more income for basic needs, which gives you less discretionary income on which payments are based. Plus, your loan balance won’t grow because of unpaid interest if you keep up with payments.
The SAVE plan isn’t just for those who borrowed less than $12,000.
For every $1,000 borrowed above that amount, a borrower could see that debt forgiven after an extra year of payments, according to the Federal Register. For example, if you borrowed $14,000, you’d see forgiveness after 12 years.
You’ll see a benefit from this early forgiveness if you took out less than $21,000.
If you took out more, don’t worry. Your repayment term cap will kick in.
That’s the maximum length of time you’ll be repaying the debt. It varies depending on if you have undergraduate, graduate or a mix of loans.
If you have only undergraduate loans, your repayment term cap is 20 years. If you have a mix of undergraduate and graduate loans or just graduate loans, your cap is 25 years, according to the Office of Federal Student Aid.
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