As student loan payments are set to resume in the coming weeks, the Education Department has launched a new application for a more affordable repayment plan.
The Biden administration is phasing in a new, more affordable student loan repayment plan. And as payments are set to resume for millions of Americans in the coming weeks, the Education Department has launched a new application so borrowers can apply for the new program.
Here’s what borrowers should know.New Repayment Plan As Student Loan Payments Resume
In the wake of last month’s Supreme Court decision striking down the Biden administration sweeping student loan forgiveness plan, the President unveiled a new income-driven repayment plan. The Saving on a Valuable Education plan, referred to as the “SAVE” program, is being billed by administration officials as the most affordable student loan repayment plan in history. The SAVE plan is replacing Revised Pay As You Earn (REPAYE), another income-driven repayment plan that has been available since 2016.
The SAVE plan will feature a number of benefits including a higher poverty exemption limit (meaning more of a borrower’s income will be excluded from consideration, which in turn will lower payments), and a waiver of excess interest accrual to end runaway balance growth, which has long been associated with income-driven repayment plans. The SAVE plan will also have a more affordable repayment formula, flexibilities that will allow married borrowers to exclude spousal income by filing taxes separately (unlike the REPAYE plan), and accelerated student loan forgiveness for borrowers with smaller initial balances.
