Texans to benefit most from Biden student loan forgiveness measure
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Texas, Florida and California will benefit the most from a student loan forgiveness program that seeks to cancel remaining balances for longtime borrowers.
Why it matters: Americans owe $1.75 trillion in student loans, mostly from federal loans, per Forbes.
- That's almost $29,000 owed per borrower, on average.
Catch up fast: The U.S. government paused federal student loan repayments and interest accruals during the COVID-19 pandemic.
- The Biden administration canceled up to $20,000 in student loan debt in August 2022, but the Supreme Court struck down his plan in June.
- Interest will start accruing on Sept. 1, and payments will be due in October.
What's happening: The Department of Education has instituted a 12-month "on-ramp" period for repayment so that "financially vulnerable" borrowers who miss payments between October 2023 and September 2024 are not considered delinquent.
- The department also introduced an income-driven repayment plan, Saving on a Valuable Education (SAVE), that will lower monthly payments for certain borrowers.
Meanwhile: Eligible borrowers who have made payments for around 20 or 25 years — depending on the timing, type and payment plan of their loans — will automatically have the rest of their balance forgiven, per the U.S. Department of Education.
- The total loan forgiveness is estimated to be around $39 billion. Texas has the largest number of borrowers that will be impacted.
- The measure will help almost 64,000 borrowers in Texas carrying roughly $3.1 billion of debt, per The Hill. Almost 62,000 Californians and 57,000 Floridians have also been approved for this form of debt forgiveness.
What's next: The beta site for SAVE plan enrollments is now active.