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Monday, April 22, 2024

Biden administration introduces new student loan repayment plan

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The Biden-Harris administration has introduced a new income-driven student loan repayment plan.

The program, known as Saving on a Valuable Education or SAVE, is designed to provide relief to student borrowers based on family size and income. The SAVE plan exempts single borrowers earning less than $15 per hour from making any payments, while those with higher earnings would experience over $1,000 in annual payment savings compared to other income-driven repayment (IDR) plans. A key advantage of the SAVE initiative is that borrowers will not see their debt balance increase due to unpaid interest, given they adhere to their required payments. It is available to all borrowers with direct loans in good standing.

“Starting today, millions of borrowers can reduce their monthly student loan bills by enrolling in the SAVE plan, the most affordable repayment plan in history,” said U.S. Secretary of Education Miguel Cardona in a press release. “The SAVE plan is another huge step forward in President Biden’s tireless efforts to fix the broken student loan system, reduce the burden of student debt on working families, and put borrowers first. SAVE isn’t just about helping borrowers today, it’s about creating a more affordable pathway for millions of aspiring students who dream of earning college degrees and achieving the American dream—that’s exactly what the Biden-Harris Administration has fought to do since day one.”

According to the Department of Education, the new IDR application takes around 10 minutes to complete, and it allows borrowers to choose to have their income accessed securely from the IRS and automatically recertified annually, in order to avoid reapplying.

The plan comes right before the end of the COVID-19 era student loan forbearance, which is set to end on Sept. 1. This is the latest in a series of efforts President Biden has made to address the student loan crisis. Earlier this year, the Supreme Court struck down his initial plan to forgive up to $20,000 in student loan debt for eligible borrowers, claiming the HEROES act does not grant the executive branch the authority to do so. Now the administration is trying to achieve a similar goal through the Higher Education Act while softening the blow of repaying student loans.

According to the Federal Reserve, Americans owe around $1.77 trillion in student loan debt.

Contact Indy Kids Winning Reporter Andrew Pillow at andrewp@indyrecorder.com. Follow him on Twitter @AndrewPillow.

Andrew’s work is supported through a partnership between Indy Kids Winning and the Indianapolis Recorder. Visit indykidswinning.com to learn more. For more local news, click here.

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