FINANCE
How can I benefit from President Biden’s new student loan forgiveness plan?
President Joe Biden’s administration plans to implement a new student loan forgiveness plan after the Supreme Court ruling. Here’s how it will work.
In late June, the Supreme Court decided to strike down the student loan forgiveness program proposed by President Joe Biden. It would have forgiven up to $20,000 in student loan debt for up to 40 million borrowers.
Following the decision of the highest court, the president announced a series of measures and new plans to help students and their families. As its implementation continues, borrowers should prepare for the resumption of loan payments.
How can I benefit from President Biden’s new student loan forgiveness plan?
The Department of Education created “the most affordable payment plan ever created,” called the Savings for Valuable Education (SAVE) Plan. According to the White House, borrowers will be able to take advantage of this plan in late summer, before payments resume.
Many borrowers won't have to make monthly payments under this plan and those who do will save more than $1,000 a year, according to the White House.
As shared by the Biden administration, the SAVE Plan will reduce monthly payments to $0 for millions of borrowers who earn $32,800 or less individually per year. The limit will be $67,500 per year for a borrower in a family of four. All other borrowers will save at least $1,000 per year with this plan.
The SAVE Plan will also “stop runaway interest” that “leaves borrowers with more than their initial loan in debt,” Education Secretary Miguel Angel Cardona said in a statement. For example,under this plan, if you make your monthly payment, your loan balance will not increase due to unpaid interest.
How to apply for the SAVE Plan?
Borrowers who are currently registered under the REPAYE program will be transitioned to the SAVE program automatically. If you are currently on an Income Driven Repayment (IDR) plan other than REPAYE, you have the option to switch to REPAYE in order to be automatically enrolled in SAVE once it is launched. Alternatively, you can choose to wait until the SAVE application becomes available later this summer.
You can apply for an IDR if you’re not on one currently and select REPAYE if you want to enroll in the SAVE plan.