Several repayment plans allow for the cancellation of debt after a certain number of years.
The Biden administration on Friday announced new efforts to ease and forgive student loans, as more than 40 million borrowers remain saddled with debt for their educational pursuits.
« 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, » President Joe Biden said in announcing the new plan.
The Supreme Court struck down widespread student loan forgiveness last month, ruling that Biden’s plan was unconstitutional. However, on Friday, the president announced that the administration plans to forgive debt for 800,000 people through income-driven repayment (IDR) plans.
« When the Supreme Court made the wrong decision, I immediately announced a new plan to open an alternative path to relief for as many borrowers as possible, as soon as possible, » Biden added in his statement.
The point of IDR plans is to give student loan borrowers the opportunity to repay their debts without significant financial hardship each month. The plan sets monthly payments based on a person’s income and family size. There are four types of income-driven plans:
Revised Pay As You Earn Repayment Plan (REPAYE Plan)
Pay As You Earn Repayment Plan (PAYE Plan)
Income-Based Repayment Plan (IBR Plan)
Income-Contingent Repayment Plan (ICR Plan)
All four plans offer loan forgiveness after either 20 or 25 years of payments.
