The Biden administration launches a new student loan repayment plan application in its latest attempt at relief for millions of borrowers.
The Biden administration is launching an application for a new student loan repayment plan Tuesday as part of its latest attempt to offer relief to borrowers as payments resume despite significant political hurdles.
„This plan is a game changer for millions of Americans, many of whom are putting off having children, buying their first home, or even starting a business because they can’t get out from under their student loans. Student loans will be manageable,“ Biden’s domestic policy adviser, Neera Tanden, said.
The new plan is part of the administration’s continued efforts to tackle student loans after its push to outright cancel up to $20,000 in debt for some borrowers was struck down by the Supreme Court earlier this year.What is the SAVE plan?
The SAVE, or Saving on a Valuable Education, plan is an income-driven repayment program that calculates payment size based off income and family size. It allows borrowers who consistently make their monthly payments to see their debt forgiven after a certain number of years.
Starting in July of 2024, borrowers approved for a SAVE plan will see their monthly payments slashed in half for undergraduate loans, falling from 10% to 5% of disposable income — the money left over after paying for necessities like food and rent.
For those with both graduate and undergraduate loans, payments would be between 5-10% of their income, weighted based off their initial loan amounts.
The administration estimates that this will save the typical borrower about $1,000 a year on their payments.
