Student Loan Forgiveness For “Runaway Interest”

The Biden administration’s SAVE Plan for student loan borrowers could affect millions. This new student loan debt relief plan helps those with “runaway interest.” Let’s explore the details and requirements to have runaway interest forgiven.

Key Points:

• The Biden administration plans to forgive up to $20,000 in “runaway interest.”
• Forgiving runaway interest could affect as many as thirty million borrowers.

What is Runaway Interest on Student Loans?

Runaway interest means that borrowers owe the same, if not more, than they originally borrowed, even if they have been making payments for years because of interest rates.

What is Biden’s Plan with Runaway Interest?

The Biden administration intends to forgive $20,000 for student loan borrowers whose balances have increased because of unpaid interest. This would apply regardless of the student loan borrower’s income level.

The total balance of unpaid interest will be forgiven for borrowers who qualify for income-driven repayment (IDR) plans.

Runaway interest would apply to student loan borrowers who began repaying over twenty years ago.

• For those with undergraduate degrees, the borrower would qualify for forgiveness if they first entered repayment on or before July 1, 2005.
• Borrowers with graduate school debt would qualify if they first entered repayment on or before July 1, 2000.

According to the White House press release, this new student loan forgiveness plan would provide relief for more than thirty million borrowers.

What Steps Do You Have to Take to Cancel Runaway Interest

If your student loan balance has increased after entering repayment, and you are enrolled in the SAVE plan or any other income-driven repayment (IDR) plan, you would be eligible to have the entire balance that has increased since entering repayment to be forgiven.

$5 Billion More in Student Loan Debt Relief for 74,000 Borrowers

No application will be needed to receive this relief from runaway interest.

Student Loan Debt Relief and SAVE Plan Facts

• The Biden-Harris Administration has approved $146 billion in student debt relief.
• Four million student borrowers have benefitted from more than two dozen executive actions.
• The Saving on Valuable Education (SAVE) Plan is the most affordable plan for student loan borrowers.
• More than eight million borrowers are enrolled in the SAVE plan.
• More than 4.5 million student loan borrowers have a monthly payment of $0 under the SAVE PLAN.
• More than one million student borrowers pay less than $100 monthly.

Click this link to read the White House Press Release regarding runaway interest. For additional information on student loan forgiveness, please visit the Federal Student Aid website.

Do you have a story you would like to share regarding your student loan debts being forgiven under the Biden administration? Then feel free to email me at alex@bankruptcy.blog.

Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. For paralegals and students buying single copies, you can do so via Amazon books. To access my YouTube channel, click this link. Archives on student loans can be found via this link.

Additional subjects can be found below or by using the search bar at the top of this page.

• Bankruptcy
• Your Wallet

Please note that the information on the bankruptcy blog should be used for educational and informational purposes only and is not considered legal advice.