$60 million in Ohioans' student loans forgiven, with more expected: Are you eligible?
COLUMBUS, Ohio (WCMH) – More than 7,500 Ohioans will see their student loan balances wiped clean in the coming weeks, with more borrowers expected to follow suit.
Federal loan servicers began processing loan forgiveness for 150,000 borrowers across the country on Friday, totaling $1.2 billion in student loans. Ohioans will see $60 million in their loans forgiven.
All forgiven borrowers are enrolled in the Saving on a Valuable Education, or SAVE, plan, an income-driven repayment plan that sets monthly payments based on borrowers’ family size and discretionary income. Borrowers enrolled in the SAVE plan have their balances cleared after 20 or 25 years of monthly payments, but the borrowers under this round of forgiveness were targeted for early debt relief.
It’s the Biden Administration’s latest round of targeted loan forgiveness since President Joe Biden’s sweeping student debt-relief proposal was rejected by the Supreme Court last June. The U.S. Department of Education will continue to forgive loans early for eligible borrowers on a “regular basis,” according to a news release.
To be eligible, borrowers must:
- Be enrolled in the SAVE plan
- Have made at least 10 years of payments
- Originally took out less than $12,000 in loans (original principal balance, not current balance)
Borrowers who took out more than $12,000 in original loans can become eligible for early forgiveness; for every additional $1,000, they must make an additional year of monthly payments.
Those whose balances will be zeroed under this round of forgiveness were notified via email and do not need to take action. It may take a few weeks for the forgiveness to be processed, the education department noted.
Ohio ranked fifth among states in both number of borrowers and amount forgiven under the SAVE plan early forgiveness. Texas ranked first in both categories, with nearly 15,000 borrowers being forgiven $116.6 million in student loans.
What is the SAVE plan?
The SAVE plan, which has expanded in the past year, is designed for low- and middle-income borrowers who pay no interest on their loans so long as they make monthly payments. Monthly payments are based on discretionary income and those who earn less than 225% of the federal poverty line pay $0 each month.
For those who earn above 225% FPL, monthly payments are valued at 10% of their discretionary income. In July, monthly payments will be reduced to 5% of a person’s discretionary income.