Biden pushes new student loan repayment plan as bills loom for tens of millions
Biden pushes new student loan repayment plan as bills loom for tens of millions
The effort to boost enrollment in the income-driven repayment program comes as student loan payments resume for the first time since March 2020.
President Joe Biden on Tuesday launched a promotional blitz for his new program that helps student loan borrowers repay their debt, just weeks before millions of Americans are set to receive a loan bill for the first time since the beginning of the pandemic.
The Biden administration is mobilizing to convince borrowers across the country to sign up for the new income-driven repayment program — dubbed the “SAVE plan” — which caps interest accrual and lowers the monthly payment amount for many borrowers.
“It’s the most affordable student loan plan ever,” Biden said in a video released by the White House on Tuesday, describing the program as a major reform to a student loan system “that hurt borrowers for much too long.”
“If you’re eligible for the SAVE Plan, sign up now so you can lower your monthly payments in advance of payments resuming this fall,” Biden said.
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This article doesn’t really say what the SAVE plan does so I’m reposting this here.
…the SAVE plan is coming in July 2024 to replace REPAYE, with some parts rolling out this summer and all the details here.
The department says that under the old plan, borrowers repaid $10,956 for every $10,000 they borrowed. Under the new plan, they would pay back just $6,121.
It’s more technical than direct forgiveness but will change income-based plans in the following ways according to this NPR article:
Starting Summer 2023:
- floor for protected income rising from 150% to 225% of poverty line
- no interest while payments are being made
Starting Summer 2024:
- payments now based on 5% rather than 10% of borrowers’ remaining income
- those who borrow $12,000 or less can gain full forgiveness in 10 years rather than 20 (with each additional $1000 adding another year so $13,000=11 years etc.)
It’s a start, hopefully someone sees this and saves some money.
Also want to add that these changes are not subject to Congressional approval. They could be repealed (impossible with a Dem Senate + Presidential veto) or they could be struck down by SCOTUS, but this is all being performed via powers given by the Higher Education Act and are generally on much firmer legal ground than the loan forgiveness plan SCOTUS scuttled.
Just applied tonight and looks like it should reduce my payment by about 50%.
I'm so happy for you! I'm going to see if we can bring down my wife's grad school loan payments. They may not apply.
Thank you! My loans are from law school and they qualified so definitely give it a shot. Good luck to you and your wife!
Oh man that’s great! This is not the complete loan forgiveness I had hoped for but it’s a start and I hope lots more benefit from this especially the ones who needed it the most.
No interest while payments are being made is absolutely gigantic. It's really a game changer.
My payments are already rock bottom but it's the lower interest that I'm (heh) interested in.