153,000 student-loan borrowers are getting $1.2 billion in debt wiped out — the first group to see relief under a new repayment reform

• On Wednesday morning, Biden announced $1.2 billion in student-debt relief for 153,000 borrowers.
• It's the first batch of borrowers to benefit from a new provision of the SAVE income-driven repayment plan.
• The provision allows a shorter timeline for relief for borrowers who've made as few as 10 years of payments.

Thousands of student-loan borrowers just became the first group to see relief under President Joe Biden's new repayment reform.

On Wednesday, Biden — along with the Education Department — announced that 153,000 borrowers are getting $1.2 billion in debt cancellation as a result of a new provision in the SAVE income-driven repayment plan.

Specifically, the Education Department announced in January that borrowers who originally borrowed $12,000 or less and completed as few as 10 years of qualifying payments could become eligible for forgiveness — a change from the prior requirement of at least 20 years of qualifying payments.

And for every $1,000 a borrower took out above the $12,000 threshold, they can get their loans wiped out after another year of payments.

"If you've been paying for a decade, you've done your part, and you deserve relief," Education Secretary Miguel Cardona said in a statement. "Under President Biden's leadership, our Administration has now approved loan forgiveness for nearly 3.9 million borrowers, and our historic fight to cancel student debt isn't over yet." 

According to the Education Department, Biden will begin sending emails to impacted borrowers on Wednesday notifying them of their relief, and they will not need to take any additional action. Servicers "in the coming days'" will begin applying the changes to borrowers' accounts.

"Moving forward, borrowers who meet the eligibility criteria for forgiveness under the SAVE Plan will have their loans automatically discharged with no action needed on their part," the press release said, noting that the department will continue identifying borrowers who qualify for relief "on a regular basis."

Student-loan borrowers who are currently not on the SAVE plan but want to benefit from this shortened timeline for forgiveness can apply to enroll in the plan. Once they do, the department will notify them of any relief they might qualify for.

The Education Department first implemented the SAVE plan over the summer, intended to make borrowers' monthly payments cheaper. While some provisions of the plan will not go into effect until July, Wednesday's relief is a result of the department opting for early implementation.

Along with this latest relief, the department has also been carrying out account adjustments for borrowers who have made qualifying payments under income-driven repaymeny plans and Public Service Loan Forgiveness but had yet to receive relief. Those adjustments are set to be completed in July, and thousands of borrowers have already seen their balances wiped out from those reforms.

Of course, the relief comes as many borrowers are encountering challenges with the return to repayment that began in October. Four of the major federal servicers have struggled to manage the transition back into repayment, leaving borrowers with account errors and a lack of timely billing statements.

The Education Department has vowed to conduct oversight over servicers, and in the meantime, it is continuing to carry out targeted forms of relief to borrowers who have completed their qualifying payments on repayment plans.

"For too long the system did not work for borrowers, even when they were eligible for loan forgiveness," Under Secretary of Education James Kvaal said in a statement. "Today's announcement shows that President Biden's commitment to student debt cancellation continues to deliver."