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.
