Hartford, CT – This week brought welcome news for over 1,600 student loan borrowers in Connecticut, as the Biden administration announced that their remaining federal student debt would be forgiven under the Saving on a Valuable Education (SAVE) plan.
The announcement comes after over a year of back-and-forth on student loan forgiveness. President Biden originally proposed widespread debt cancellation of $10,000 per borrower, which would have benefited over 300,000 borrowers in Connecticut. However, legal challenges led to that plan being struck down by the Supreme Court last year.
Undeterred, the Biden administration has continued to seek avenues for providing student debt relief through executive action. The latest effort focuses on the SAVE program, an income-driven repayment plan launched in 2022. Under this program, borrowers who initially took out $12,000 or less in federal loans and have repaid them for at least 10 years can have their remaining balance discharged.
For Tiffany James, a social worker from New Haven, this news came as an enormous relief. “I’ve been paying diligently on my student loans for over 15 years,” she said. “To finally have the end in sight is just such a weight off my shoulders.”
James is one of the 1,600 Connecticut residents who will see a total of $13.7 million in loan balances forgiven under the SAVE plan. Nationwide, over 150,000 borrowers will have $1.2 billion discharged.
To qualify, borrowers must have an annual income under $32,800. Payments are capped at 5% of discretionary income, and any unpaid interest does not accumulate. According to the Department of Education, more borrowers are expected to become eligible as adjustments to the program take effect in July.
For recent college graduate Mark Davis, the SAVE plan offers a light at the end of the tunnel. “As someone just starting out, having this debt hanging over me has been really daunting,” he said. “Knowing it could eventually be forgiven makes me feel like I can actually focus on building my career.”
The student debt crisis has weighed heavily on millions of Americans. Currently, 45 million borrowers nationwide hold over $1.6 trillion in federal student loan debt. In Connecticut, residents carry $14 billion in outstanding loans.
This crisis has disproportionately impacted borrowers of color. An analysis by the Student Borrower Protection Center found that 20 years after first enrolling in school, the typical Black borrower still owes 95% of their original student debt. For white graduates, that figure is just 6%.
Earlier efforts by the Biden administration have provided some assistance. Over 110,000 borrowers in Connecticut qualified for expanded eligibility under the Public Service Loan Forgiveness Program. And student debt held by 300 Connecticut residents was cancelled last year after they were found to have been defrauded by the now-defunct ITT Technical Institute.
However, widescale debt cancellation has remained elusive. Senate Democrats attempted to pass a resolution to restore the administration’s authority on blanket student loan forgiveness, but were blocked by Republicans.
With legislative action stalled, the White House has turned to executive authority to provide relief through existing programs. In total, the administration reports cancelling $138 billion in student debt impacting nearly 4 million borrowers thus far.
At a recent speech in California, President Biden reaffirmed his commitment to the issue. “When people with student debt are relieved, they buy homes, start businesses, and contribute to their communities,” he said.
Still, many student advocates say bolder action is needed. “While we appreciate steps in the right direction, we ultimately need broad student debt cancellation paired with free college so that none are denied the right to education because they can’t afford it,” said Stephanie Gruver of the Connecticut Student Debt Crisis Coalition.
As for Tiffany James, she is thankful for any assistance as she nears the finish line. “I went to school to help people in need. Now this program is helping me,” she said. “It’s not a magic wand, but it’s bringing me a lot closer to financial stability.”
