The Biden Administration has announced the official launch of the most affordable student loan repayment plan – the Saving on a Valuable Education (SAVE) plan.<\/p>\n
Also, an outreach campaign to encourage eligible borrowers to sign up for the plan has been kicked off.<\/p>\n
The SAVE plan is an income-driven repayment (IDR) plan that calculates payments based on a borrower’s income and family size – not their loan balance – and forgives remaining balances after a certain number of years. <\/p>\n
The SAVE plan will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster. <\/p>\n
The SAVE plan builds on the actions the Biden Administration has already taken to support students and borrowers, including cancelling more than $116 billion in student loan debt for 3.4 million Americans. <\/p>\n
It is estimated that more than 20 million borrowers could benefit from the SAVE plan. Borrowers can sign up today by visiting StudentAid.gov\/SAVE<\/p>\n
The SAVE plan will cut payments on undergraduate loans in half. Borrowers with undergraduate loans will have their payments reduced from 10 percent to 5 percent of their discretionary income. Those who have undergraduate and graduate loans will pay a weighted average between 5 percent and 10 percent of their income based upon the original principal balances of their loans.<\/p>\n
A borrower who makes about $15 an hour will not have to make any monthly payments. Borrowers earning above that amount would save around $1,000 a year on their payments compared to other IDR plans. The Department of Education estimates that more than 1 million additional low-income borrowers will qualify for zero repayment. This will allow them to focus on food, rent, and other basic needs instead of loan payments, the White House said.<\/p>\n
The scheme will ensure that borrowers never see their balance grow as long as they keep up with their required payments. <\/p>\n