New Student Loan Forgiveness Application: How to Apply for Biden's Plan

The Biden administration said on Friday that it forgave student debt for tens of thousands of borrowers, the latest in a move to cancel education loans that have helped millions of Americans wipe out billions of dollars of outstanding arrears.

The 74,000 borrowers that qualify for forgiveness which amounts to about $5 billion of debt cancellation announced on Friday include teachers, nurses, firefighters, the White House said, and those who have spent a decade in public service.

"My Administration is able to deliver relief to these borrowers – and millions more – because of fixes we made to broken student loan programs that were preventing borrowers from getting relief they were entitled to under the law," President Joe Biden said in a statement.

Asked how borrowers can apply and secure the debt cancellation announced on Friday, a spokesperson at the U.S. Education Department referred Newsweek to the process of securing debt cancellation through the Public Service Loan Forgiveness, or PSLF, program.

That program says it helps forgive the remaining balance on direct loans "after you've made the equivalent of 120 qualifying monthly payments under an accepted repayment plan, and while working full-time for an eligible employer." Applicants can apply for a PSLF program through a form available on a Federal Student Aid page on their website.

Learn more: Student Loan Forgiveness Updates and FAQs: Who Qualifies and How To Apply

The other program that today's debt cancellation applies to will be through the income-driven repayment (IDR) plan whose payments are based on a borrower's income and family size. There are four different plans offered through this approach, according to the government.

"The best way to compare repayment plans is by using Loan Simulator. You can use this tool to estimate your monthly payments on different plans and compare plans side by side," the Federal Student Aid website notes, where it provides a link to apply for the IDR plan.

Friday's cancellation of debt was based on fixes instituted by the government to these two plans, according to a statement.

That allowed for nearly 30,000 borrowers to receive a total of $1.7 billion in debt cancellation through the IDR plan. An additional 43,000 loanees received $3.2 billion in cumulative relief through PSLF, according to the education department.

"Today we are helping borrowers who were promised help with their loans, planned their lives around those promises, and earned forgiveness through years of payments," U.S. Under Secretary of Education James Kvaal said in a statement.

The latest in student debt cancellation follows last week's decision by the government to speed up the process for some borrowers to have their loans forgiven. The Biden administration has tried to cancel up to $20,000 of student debt, but the initial plan was struck down by the Supreme Court last year. Since then it has offered alternative approaches to canceling student debt, including through its Saving on a Valuable Education (SAVE) plan.

Overall, the administration has canceled $136.6 billion of debt for more than 3.7 million Americans, according to the Education Department. Federal student loans in the U.S., which account for almost all of the education debt in the country, stood at more than $1.6 trillion, figures from the Education Data Initiative show. Nearly 44 million Americans are saddled with student debt with an average balance of about $38,000.

Repayment on debt resumed in September, first with interest on the loans and the reimbursements on the principal kicked in the following month. The outlays toward the debt are estimated to be $200 to $300 per month, about 5 percent of the U.S. median salary, according to some analysis.

"We're approving this loan forgiveness while moving full speed ahead in our efforts to deliver even greater debt relief, and help more borrowers get on a faster track to loan forgiveness under our new, affordable SAVE repayment plan," U.S. Secretary of Education Miguel Cardona said in a statement on Friday.