The U.S. Department of Education announced it’s erasing $1.2 billion in federal student loans. At the same time, the department is struggled to implement a new application for federal student aid.
AILSA CHANG, HOST:
The Biden administration announced today yet another big move to erase more than a billion in federal student loan debt. Here’s President Biden speaking earlier today.
(SOUNDBITE OF ARCHIVED RECORDING)
PRESIDENT JOE BIDEN: I’m proud to announce our SAVE Plan. We are immediately canceling the debt loans for over 150,000 borrowers nearly six months ahead of schedule.
CHANG: The news offers Biden’s education department a chance to change the subject after a recent string of embarrassing missteps. NPR’s Cory Turner joins us now to talk us through it all. Hey, Cory.
CORY TURNER, BYLINE: Hi, Ailsa.
CHANG: So I want to start with this debt forgiveness. Exactly who is going to get this help, and how does it work?
TURNER: Well, as we just heard President Biden mention, it’s part of his new repayment plan, which is called SAVE. The plan promises loan forgiveness for folks who borrowed less than $12,000 and who’ve been in repayment for at least a decade. Now, originally, the Ed Department wasn’t going to roll this out until July, but they decided to fast-track it.
As for who it’s going to help, Ailsa, we’re talking about – for now, anyway – 150,000 borrowers, thereabouts. A lot of them are community college students, lower-income borrowers. It’s also worth noting that $12,000 threshold – it’s not a hard cutoff. So for every $1,000 you borrow on top of that, just add one year to the forgiveness time.
CHANG: OK. This sounds really great, but do we know how much this loan relief is going to cost?
TURNER: Well, there are a couple different answers to that question. Today’s announcement is going to erase about $1.2 billion in federal student loan debt. More broadly, though, the SAVE Plan is likely to have a pretty hefty price…
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