What Biden’s new student loan repayment plan could mean for some borrowers

WASHINGTON – Immediate relief for some student loan borrowers is expected to start as early as February.

The Education Department said it is speeding up its timeline for bringing forgiveness to borrowers enrolled in President Biden’s new income-driven repayment plan.

Millions of federal student loan debt will be wiped away next month under Biden-Harris Administration’s SAVE repayment plan.

President Biden said the plan is six months ahead schedule, bringing qualifying borrowers relief a lot sooner.

Borrowers with small loans that are $12,000 or less in federal loans and have been paying off their balances for at least 10 years are eligible.

“A lot of people who borrowed less than 12,000 will get their loans forgiven. If you’ve borrowed more than that you still have the potential for long-term forgiveness so it’s still going to free up a lot of cash flow,” Financial Advisor Jeff McDermott said.

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The average American has over $37,000 in student loan debt, according to the Education Data Initiative.

McDermott said there are other options for people with mounting student loan debt.

“First and foremost keep paying, keep accumulating time towards longer-term forgiveness. Some of those other programs that are out there. Review and look at the income-driven repayment plans, if you’re not already on one. These plans like the save plan are necessary to qualify for a lot of these forgiveness programs that are out there,” McDermott said.

On the other hand, McDermott said private loans can be a little tricky.

“They don’t have some of the same benefits or conditions that federal loans have but you may be able to consider a refinance, a lot of private loans do have higher interest rates,” McDermott said.

As additional options, McDermott suggests checking your local state debt relief programs and tuition reimbursement programs at your job that can be used to pay back student loans.