Biden Administration Unveils New Student Loan Debt Relief Plan

Biden Administration Unveils New Student Loan Debt Relief Plan, Aims to Ease Burden for Millions

Join For Personal Benefits News

With the impending resumption of student loan debt payments in October after a COVID-19-induced hiatus, a new federal repayment plan called SAVE (Saving on a Valuable Education) has been introduced by the Biden administration.

Biden Administration Unveils New Student Loan Debt Relief Plan
Biden Administration Unveils New Student Loan Debt Relief Plan ( Photo: Courthouse News Service )

President Biden’s ambitious $20,000 student loan debt relief proposal faced a setback in June, but there’s renewed hope for struggling borrowers

Unlike previous plans, SAVE considers a borrower’s income and family size, not the total student loan debt amount. This new initiative significantly eases the burden for low-income individuals by increasing the income exemption from 150% to 225% of the poverty line. For instance, single borrowers earning $32,800 or less, or families of four earning $67,500, will not have to make student loan debt payments. Borrowers earning more will still save a minimum of $1,000 annually compared to current income-driven plans.

Although SAVE lowers monthly payments, it may extend the repayment period, potentially increasing the overall cost due to accrued interest. However, a key advantage is the elimination of all remaining interest for both subsidized and unsubsidized student loan debt after a scheduled payment is made. Furthermore, borrowers may see their remaining balance forgiven after a decade of consistent payments under this plan.

To enroll in the SAVE plan, borrowers must complete an application for income-driven repayment plans on the Federal Student Aid website

It’s important to note that both SAVE and other income-driven plans necessitate an annual reassessment to account for changes in income or family size. While factors like a raise or marriage may increase monthly payments, married borrowers can opt for separate tax filings to exclude their spouse’s income from the calculation. This initiative brings a glimmer of relief for millions weighed down by student loan debt, offering a more manageable path toward financial stability.

 

READ ALSO: Federal Student Loan Payments Resume: New York Department Of State Offers Tips To Guard Against Scams


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *