July 15th 2023.
President Joe Biden’s new plan, Saving on a Valuable Education (SAVE), was set in motion following the Supreme Court’s decision to shut down his student loan forgiveness program last month. According to NPR, the plan is an income-based repayment plan, which comes with certain stipulations that can make monthly bills more manageable and reduce the amount that students will have to pay in the long-term. In some cases, borrowers may even have their debt canceled entirely after making 10 years of payments.
Although the plan may be expensive, it is set to continue to help those who borrow now and in the future. Estimates from the government suggest that it could cost between $138 billion to $361 billion over a 10-year period. Unlike Biden’s rejected program, it will not be a one-time forgiveness program.
The Department of Education is now processing Biden’s SAVE repayment, which is a positive sign for how it will fare in the legal system. It is an income-driven repayment plan, meaning the designated payments will be based on individual borrowers’ income and family size. After 10 years of making the designated payments, the borrower’s remaining balance will be wiped away.
In addition, the new SAVE plan will stop interest from accruing on their accounts as long as they make minimal monthly payments. All of the SAVE’s components will be fully in effect by July 2024 and it will phase out the current Revised Pay As You Earn, REPAYE, plan. Eligible borrowers include people with federally held loans, including all direct subsidized, unsubsidized and consolidated loans, as well as PLUS graduate loans.
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