The Biden administration on Tuesday officially launched an application for a new student loan repayment plan.
The U.S. Department of Education launched a beta website on July 30 to accept student loan payment applications under the administration’s new SAVE Plan, and announced on Tuesday that the site was now fully ready for borrowers to apply.
The Saving on a Valuable Education, or SAVE, plan covers both current and future college students who take out federally backed student loans, the DOE said.
“This plan is a game changer for millions of Americans, many of whom are putting off having children, buying their first home, or even starting a business because they can’t get out from under their student loans. Student loans will be manageable,” Biden’s domestic policy adviser, Neera Tanden, said Tuesday.
While applications for the plan are open now, the benefits will not be seen until July 2024. That is the date borrowers approved for a SAVE plan will see their monthly payments cut in half for undergraduate loans, falling from 10% to 5% of disposable income, or the money left over after paying for necessities like food and rent.
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For those with both graduate and undergraduate loans, payments will be between 5-10% of their income, weighted based on their initial loan amounts, according to the DOE.
However, for those approved for a SAVE plan who make less than $32,805 a year, monthly payments will drop to $0 until their income increases. For a family of four, the same is true if you are making less than $67,500.
The DOE says the enrollment process takes about 10 minutes, and many sections can be automatically populated with information the government has on hand, including tax returns from the IRS, administration officials said.
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“We will be able to show borrowers their exact monthly payment amount and give them the ability to choose the most affordable repayment plan for them,” an official from the Biden administration told CNN last month.
The repayment plan is based on both income and family size and excludes spousal income as a determining factor.
Some Republicans have been critical of Biden’s plans to eliminate student debt taken out by millions of Americans.
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“The Biden administration’s blatantly political attempt to circumvent the Supreme Court is shameful. The Biden administration is trampling the rule of law, hurting borrowers, and abusing taxpayers to chase headlines,” Republican Rep. Virginia Foxx, who is chairwoman of the House Education and Workforce Committee said in a statement when the policy was announced last month.
Roughly 45 million Americans have federal student debt, totaling more than $1.6 trillion in borrowed money.
The SAVE Plan is expected to save borrowers at least $1,000 per year according to the White House. Some borrowers will be eligible to have their loan forgiven after 10 years of repayment. The plan also eliminates 100% of the remaining interest for subsidized and unsubsidized loans after a payment is made.
