New Biden Student Loan Plan Cuts Payments For Millions, According To The White House
A new Biden student loan plan cuts payments for millions, according to the White House. The Biden administration on Tuesday said it was overhauling student loan repayment plans. The action seeks to reduce the amount owed each month and curb unpaid interest.
Allegedly, the changes would save $1000 a year for the typical borrower, and $2000 a year on loans taken by a graduate of a four-year public college or university. The White House says that tens of millions of Americans are eligible to enroll in the plan.
The Biden administration officially announced this plan Tuesday, August 22, 2023. The official launch of the Saving on a Valuable Education (SAVE) plan comes just weeks before interest will begin to accrue on student loans for the first time in more than three years in September.
Borrowers can visit a page on the Federal Student Aid website to begin this process. The application takes about 10 minutes to complete. A senior administration official said borrowers who want to see the benefit of the SAVE plan before payments restart should apply in the next few days. Applications will take around four weeks to process, the official said.
Additionally, the Biden administration announced an outreach campaign to ensure that borrowers are aware of the new plan. The plan will have a two-phase rollout. Some of the plan will be implemented in 2023, this year, while other parts won’t go into effect until July 2024.
This year, the income exemption for monthly payments will be raised from 150 percent above the poverty line to 225 percent. An individual borrower making up to $32,800 per year and a family of four making less than $67,500 per year will have $0 monthly payments.
Multiple other changes will occur next July, such as cutting monthly payments from 10 percent to 5 percent of a person’s discretionary income for undergraduate loans. The administration also says that it has forgiven more than $116 billion in student loan debt for 3.4 million borrowers through different programs.
A universal student loan forgiveness program is still in the works. The Education Department has begun the negotiated rule-making process to develop a new plan. But details on who will qualify and how much debt forgiveness would occur under such a program will not be available for months.
The full effects of this plan will be felt in the coming years. The new Biden student loan plan cuts payments for millions, and could effect millions more.