Jill on Money: A new student loan forgiveness plan for borrowers

Student loan relief is coming to another 74,000 Americans, with President Biden on Friday announcing an additional $5 billion in debt forgiveness for borrowers including teachers, nurses and firefighters. 

The announcement marks the latest round of debt cancellations since the Supreme Court last summer blocked Mr. Biden's student loan forgiveness program, and brings to $136.6 billion forgiven for more than 3.7 million Americans. 

The discharges are the result of fixes made by the administration to income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF), with the Department of Education saying that payments are now being accounted for more accurately.

The Biden administration a week ago said that, starting in February, people with less than $12,000 in student loans and who have been making payments for at least 10 years would get their remaining loan balance erased. Borrowers also have to be enrolled in the White House's new Saving on a Valuable Education (SAVE) repayment plan.

Who qualifies for Biden's latest round of student loan forgiveness?

Nearly 44,000 of the borrowers approved for debt relief are teachers, nurses, firefighters, social workers and public servants with at least 10 years of service. The remaining close to 30,000 borrowers have been making payments on their loans at least 20 years, but who did not get relief through income-driven repayment plans. 

Broken down, the relief unveiled on Friday includes the following categories:

• $1.7 billion for 29,700 borrowers through administrative adjustments to IDR payment counts that have brought borrowers closer to forgiveness and address "longstanding concerns with the misuse of forbearance by loan services." The latest move brings to $45.7 billion in IDR relief for 930,500 borrowers overall, according to the DOE.
• $3.2 billion for 43,000 borrowers under the Public Service Loan Forgiveness (PSLF) program. Total relief through PSLF now stands at $56.7 billion for 793,400 borrowers since late 2021. 

Why is it necessary to fix income-driven repayment plans?

The Higher Education Act and Education Department regulations state that a borrower is eligible for forgiveness after making either 240 or 300 monthly payment in an IDR plan or the standard repayment plan. The different number of months depends on when a borrower first took out the loans, what type of loans they had and the IDR plan in which they were enrolled. 

But faulty payment counts meant that some borrowers weren't progressing toward loan forgiveness, the administration noted.

How many people are enrolled in SAVE?

There are about 6.9 million borrowers enrolled in the new IDR plan, and about 3.9 million of those have monthly payments of $0, according to the administration.

How to apply for student loan debt relief

Borrowers can find additional resources at studentaid.gov and sign up for the SAVE plan at StudentAid.gov/save. 

Kate Gibson

Kate Gibson is a reporter for CBS MoneyWatch in New York.