Minnesota student loans receive $645 million in income-driven repayment forgiveness

(FOX 9) - Following a Supreme Court decision to reject a wide swath of student loans up to $20,000 per recipient, the Biden-Harris Administration has approved 804,000 borrowers for $39 billion in federal student loans for automatic discharge this summer as part of its oncoming efforts to "fix broken loan programs." 

In Minnesota, more than 13,600 borrowers will receive approximately $645 million in income-drive repayment forgiveness in the coming weeks. Eligible borrowers will not have to take any action to receive this income-driven repayment forgiveness, so long as they have been repaying their loans for the last 20 years.

"These borrowers will join the millions of people that my administration has provided relief to over the past two years – resulting in over $116 billion in loan relief to over 3 million borrowers under my administration," the Biden-Harris administration released in a joint statement. "Republican lawmakers – who had no problem with the government forgiving millions of dollars of their own business loans – have tried everything they can to stop me from providing relief to hardworking Americans... The hypocrisy is stunning, and the disregard for working and middle-class families is outrageous."

Following the Supreme Court decision, the Department of Education created a new income-driven repayment plan that lowers payments even further – known as the SAVE Plan.

Under the standard plan, borrowers are charged a fixed monthly amount that ensures all their debt will be repaid after 10 years.

But if borrowers have difficulty paying that amount, they can enroll in one of four plans that offer lower monthly payments based on income and family size, such as the income-driven repayment plans. If a borrower’s earnings are low enough, their bill is reduced to $0. And after 20 or 25 years, any remaining debt gets erased.

The result is more people will be eligible for $0 payments, and the new plan won’t require borrowers to make payments if they earn less than 225% of the federal poverty line — $32,800 a year for a single person. The cutoff for current plans is currently 150% of the poverty line, or $22,000 a year for a single person.

Borrowers will be able to apply this summer, but some of the changes will be phased in over time.