President Joe Biden speaks during a trilateral meeting with Philippine President Ferdinand Marcos Jr. and Japanese Prime Minister Fumio Kishida in the East Room of the White House in Washington, Thursday, April 11, 2024. . More people are becoming eligible for student loan cancellation as they hit 10 years of payments, a new finish line for some loans that’s a decade sooner than what borrowers faced in the past.
Congress created the first income-driven repayment option in the 1990s for people struggling to afford payments on standard plans. It capped monthly payments to a percentage of their incomes and canceled any unpaid debt after 25 years. Similar plans were added later, offering cancellation in as little as 20 years.
Almost 8 million Americans have enrolled in the plan, including 4.5 million who pay nothing because they have lower incomes. Under the plan, borrowers who originally borrowed $12,000 or less are eligible for forgiveness after 10 years. Those who took out more than $12,000 can get cancellation but on a longer timeline. For each $1,000 borrowed beyond $12,000, it adds an additional year of payments on top of 10 years.
It’s unclear what the suits could mean for loans that have already been canceled. A court document filed by Kansas' attorney general says it's “unrealistic to think that any loan forgiveness that occurs during this litigation will ever be clawed back.” Along with the repayment plan, Biden is trying again at a one-time student loan cancellation. In a visit to Wisconsin on Monday, heIt aims to help borrowers with larges sums of unpaid interest, those with older loans, those who attended low-value programs, and those who face other hardships preventing them from repaying student loans. It would also cancel loans for people who are eligible for other forgiveness programs but haven't applied.