245K Borrowers In IL Could See Student Loans Canceled Under New Plan

ILLINOIS — Many Illinois residents could see their federal student loans canceled, either under a new plan announced last week by the Biden administration, or through more debt cancellations announced this week.

On Friday, the Biden Administration said it signed off on debt cancellation for 74,000 student loan borrowers across the country. The cancellation applied to nurses, firefighters, teachers and others who earned forgiveness after 10 years of public service, the administration said in a statement.

It wasn’t immediately known how many in Illinois will receive debt relief, but about 30,000 were people who have been in repayment for at least two decades and didn’t receive the relief through income-driven repayment plans.

The latest action brought the total number of borrowers who have received debt cancellation under the Biden Administration to about 3.7 million people, the administration said.

Friday’s announcement comes a week after the administration announced student debt cancellation for some of the roughly 6.9 million Americans with SAVE plans.

The Biden administration did not say in his Jan. 11 announcement how many of the 244,700 Illinois residents with the plans, formally known as Saving on a Valuable Education, would be eligible for loan cancellation.

Eligible borrowers will be notified by the Education Department in February. They include those who enrolled in the new SAVE plan who originally borrowed $12,000 or less to attend college and who have made at least 10 years’ worth of payments.

The relief plan is geared to help Americans who attended community colleges, which generally cost less than four-year universities. The plan aims to place community college students “on a faster track to debt forgiveness than ever before,” Education Secretary Miguel Cardona said in a statement.

The plan differs from previous income-driven plans that offered cancellation after 20 or 25 years of payment. People who borrowed more than $12,000 will be eligible for cancellation but on a longer timeline. For each $1,000 borrowed beyond $12,000, it adds another year of payment on top of 10. The maximum repayment period is capped at 20 years for those with only undergraduate loans and 25 years for those with any graduate school loans.

The loan cancellation plan was originally set to take effect in July, but was accelerated to begin in February to provide faster relief to borrowers, Biden said in a statement. The SAVE plan was announced last year alongside a separate plan to cancel up to $20,000 in loans for millions of Americans, the latter struck down by the Supreme Court.

Unlike Biden’s proposal for mass cancellation — which had never been done before — the repayment plan is a twist on existing income-based plans created by Congress more than a decade ago.

Republicans in Congress, who tried unsuccessfully last year to block the plan, said the accelerated timeline is an attempt by Biden to widen his appeal among younger voters in the 2024 election.

A separate report shows borrowers in Illinois have $61.6 billion in federal student loan debt, carrying an average loan of $37,757. According to the report from EducationData.com, a research team that analyzes education data, Illinois ranks seventh highest among U.S. states and territories in student loan debt per borrower. There are about 1,631,500 borrowers in Illinois.

The report takes a close look at Illinois average borrowers. Here are some additional findings:

• Illinois residents are slightly less likely to have student loan debt, but have a higher average balance remaining
• 54.5 percent of Illinois borrowers are under the age of 35
• 12.7 percent of state residents have student loan debt
• Among the state’s indebted student borrowers, 15.6 percent owe less than $5,000
• 21.8 percent owe $20,000 to $40,000 (average $28,351)
• 2.6 percent owe more than $200,000.

The report also showed:

• Federal student loan debt among the 50 U.S. states, the District of Columbia and Puerto Rico averages $29 billion per state.
• The highest average student loan debt is in the District of Columbia, at about $54,945 per borrower. D.C. also has the highest number of indebted borrowers per capita, with 17.2 percent of residents in debt.
• The average federal student loan debt for borrowers in North Dakota is $28,604, making it the only state where the average debt is less than $30,000.

• Hawaiians are the least likely to have outstanding student loans, with only 8.4 percent of residents in debt.
• Among all 50 states, the District of Columbia and Puerto Rico, adults ages 25-34 are the largest indebted age group.

The Associated Press contributed to this report.