The Biden administration released a beta version of the new plan for paying back government student loans. The Saving on a Valuable Education, or SAVE, plan is a way to pay back student loans based on your income. It could cut many people’s monthly payments in half, and some people won’t have to pay anything monthly. The U.S. Department of Education says that people who borrowed money can now sign up for “the most affordable repayment plan yet.”
Biden Student Loan Debt Relief
Under the old Revised Pay As You Earn Repayment Plan, or REPAYE, borrowers had to pay 10% of their monthly extra income toward their undergraduate student debt. Under the SAVE plan, borrowers only pay 5% of their additional income.
The Education Department says that people who make less than $15 an hour will not have to make any payments under the new choice. Some of these SAVE plan perks, like the change from 10% of discretionary income to 5%, won’t be fully in place until next summer.
Here is a Tweet from President Biden Providing student loan debt relief to hardworking borrowers:
Providing student loan debt relief to hardworking borrowers is necessary to help them recover from the economic harms of the pandemic.
That’s why in our bipartisan budget agreement, I fought to keep it in place.
— President Biden (@POTUS) June 4, 2023
This is because of how long it takes for regulations to change. Still, the Education Department says that if borrowers sign up for the plan this summer, their application will be handled before they start paying back their student loans in October. Kantrowitz noted that people who sign up during the beta time will not have to sign up again later.
You can also take a look at other latest news we have covered on our site:
Since March 2020, student loan bills have been put on hold because of a Covid strategy to help people during the pandemic. After the Supreme Court turned down President Joe Biden’s plan to cancel many student loans, the president announced several other ways to help borrowers. After payments start again, there will be a 12-month time when borrowers won’t have to deal with the worst effects of not paying, like bad credit reports and collection efforts.