Tax Byte

The Department of Education has announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 borrowers who are eligible for the shortened time to forgiveness benefit under the Saving on a Valuable Education (SAVE) Plan. For a borrower to be eligible for this forgiveness, they must be enrolled in the SAVE Plan, have been making at least 10 years of payments, and have originally taken out $12,000 or less for college. For every $1,000 borrowed above $12,000, a borrower can receive forgiveness after an additional year of payments. All borrowers on SAVE receive forgiveness after 20 years (25 years if the loan was for graduate school).

• The benefit is based upon the original principal balance of all Federal loans borrowed to attend school, not what a borrower currently owes or the amount of an individual loan.
• Generally speaking, the $12,000 number means that forgiveness is aimed at those without 4-year or graduate degrees. But rather, is aimed at those who dropped out of school or borrowed small amounts to attend community college.
• Emails notifying borrowers of the forgiveness were sent beginning Mar. 1, 2024.

The borrower must be enrolled in SAVE to receive forgiveness.  See 6 Things You Should Know About the SAVE Plan at the Federal Student Aid website for details. See how to enroll here.