Student loan forgiveness: Here are 5 groups of borrowers set to see relief under new proposal

Apr. 17—STATEN ISLAND, N.Y. — Millions of Americans could soon see some or all of their debt canceled under a new student loan forgiveness plan that would benefit five different groups of borrowers.

The federal government announced the plan, under the Higher Education Act, that would fully eliminate accrued interest for 23 million borrowers, would cancel the full amount of student debt for more than 4 million borrowers, and would provide more than 10 million borrowers with at least $5,000 in debt relief or more.

Here are the five groups of borrowers who would benefit from this proposal.

1 — Borrowers who have accrued or capitalized interest on their loans since entering repayment

All borrowers with interest on their loans would be eligible for this debt cancellation — up to $20,000.

Low- and middle-income borrowers enrolled in the Saving on a Valuable Education (SAVE) plan or other income-driven repayment plans would be eligible for their entire interest balance since entering repayment to be canceled depending on their annual salary.

Borrowers are eligible:

—If they made $120,000 or less per year individually or as married filing separately.

—If they made $180,000 or less per year as a head of household.

—If they made $240,000 or less per year as married borrowers who file joint taxes.

2 — Borrowers who would otherwise be eligible for loan forgiveness under income-driven repayment plans but aren’t enrolled in those programs

Borrowers who are eligible but not enrolled in the Saving on a Valuable Education (SAVE) or Public Service Loan Forgiveness (PSLF) could see relief.

Under SAVE, borrowers who originally took out $12,000 or less in loans and have been in repayment for 10 years are eligible to get remaining debt canceled. For every additional $1,000 in loans taken out (up to $21,000 for undergraduate and $26,000 for graduate), a borrower is eligible for relief after an additional year of repayment.

For example, if a borrower took out $15,000 in loans, they are eligible for debt relief after 13 years of repayment.

Under the PSLF, borrowers in public service for 10 years who have made 120 months of qualifying payments can get their remaining student debt canceled.

3 — Borrowers with loans who entered repayment two decades ago or more

Borrowers with undergraduate debt would qualify for forgiveness if they entered repayment 20 years ago or more, and borrowers with graduate school debt would qualify for forgiveness if they entered repayment 25 years ago or more, according to the plan.

4 — Borrowers who previously enrolled in low-financial-value programs

Relief will come to borrowers who took out loans associated with programs that lost their eligibility to participate in the federal student aid program or were denied recertification.

Additionally, borrowers who attended institutions or programs that closed or failed to provide sufficient financial value would also be eligible for relief

5 — Borrowers experiencing hardship that prevents them from fully paying back their loans

This plan could provide relief to millions of borrowers who experience hardship — such as borrowers who are at high risk of defaulting on their student loans, who could be eligible for automatic relief, or families who are burdened with other expenses like medical debt or child care who can apply for relief in the future, according to the plan.

(c)2024 Staten Island Advance, N.Y. Distributed by Tribune Content Agency, LLC.