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Home News Biden Admin Unveils Revised Student Loan Repayment Plan

Biden Admin Unveils Revised Student Loan Repayment Plan

Biden Admin Unveils Revised Student Loan Repayment Plan

( – A few weeks after the U.S. Supreme Court rejected the Biden administration’s attempt to cancel billions of dollars in student loans, the Department of Education has begun enrolling student loan borrowers in its Saving on a Valuable Education (SAVE) program.

IDR (Income-Driven Repayment) is a method used in SAVE.

According to the Student Aid website, “A beta version of the redesigned IDR application is now available and includes the opportunity to enroll in the new SAVE Plan—the most inexpensive payback plan yet.”

The Student Aid website adds, “Ahead of the actual launch, we’re collecting applications to help us improve our procedures. An IDR application that is filed right away will be processed and won’t need to be submitted again.”

“Throughout this beta testing phase, the application may be intermittently accessible. Try again later if the application is not accessible. After applying, you will get an email confirmation.”

The Biden administration’s contentious student loan forgiveness program, which would have resulted in a colossal $800 billion tax-payer commitment, was overturned by the U.S. Supreme Court on June 30 in a 6-3 ruling.

Mr. Biden stated he would look for a “new way” to get around the decision after the SCOTUS judgment. The SAVE plan was unveiled by the Department of Education (DOE) on the same day as the decision.

The DOE currently provides students with four income-driven repayment options:

  • The revised pay-as-you-earn repayment plan (REPAYE Plan)
  • The pay-as-you-earn repayment plan (PAYE Plan)
  • The income-based repayment plan (IBR Plan)
  • The income-contingent repayment plan (ICR Plan)

The SAVE plan will replace the REPAYE plan, one of the four current plans with the highest usage. The DOE will phase out or restrict the remaining three.

Borrowers who have recently applied for or are currently enrolled in the REPAYE plan will automatically be moved to the SAVE plan. For these borrowers, there is no need to reapply.

Repayment of Debt in Another Form

Under the SAVE plan, borrowers with undergraduate loans will only be required to make payments equal to 5% of their discretionary income instead of 10%.

According to the Biden administration, debtors would save about $1,000 a year this way.

Additionally, instead of the previous 20-year repayment requirement, borrowers with $12,000 or less will be eligible for loan forgiveness after 10 years of installments.

The SAVE initiative has come under fire for the additional cost it will put on government spending. The DOE estimates Costs over ten years to be $138 billion.

The Foundation for Government Accountability estimated the cost to be likely $471 billion. The Congressional Budget Office estimated it to be $230 billion.

In an interview with The Epoch Times, Caleb Kruckenberg, an attorney at Pacific Legal Foundation, described the SAVE scheme as just another debt forgiveness strategy.

What they’re saying is that we’re just adjusting the conditions of repayment on how much you have to pay for things, not transferring any debt, he added.

However, if you study the policy, it states that your monthly payment will be $0 for a significant portion of borrowers. We’ll also forgive your loans after a set number of payments.

He said it was a more complex way of explaining that the debt was being canceled.

Restarting student loan repayments: SAVE vs. REPAYE

Comparing the SAVE plan to REPAYE, three key differences are present. The income exemption is first increased from 150 percent above the poverty line to 225 percent.

Therefore, under the plan, borrowers who make $32,800 or less will not be required to make monthly payments.

The unpaid interest on student loans is the subject of a second chance. In the REPAYE scheme, if a borrower owes a loan with due interest, the government will cover half of it, with the other half gradually accruing.

Such an accumulation of interest does not occur under the new SAVE strategy. Borrowers will not be charged interest as long as they make regular monthly payments to the government.

Therefore, as long as the borrower makes monthly payments, the balance of their loans does not increase.

For instance, if a borrower pays their required $30 monthly payment and has $50 in interest each month, the remaining $20 will not be assessed.

Thirdly, spousal income for debtors who are married but file separate income tax returns will be excluded under the SAVE scheme. The borrower’s spouse was formerly required to co-sign their IDR application.

The Biden administration has started enrolling debtors in the SAVE plan just months before student loan repayment is set to resume.

The COVID-19 outbreak prompted former president Donald Trump to halt student loan payments and interest accrual in March 2020. Since then, the repayment suspension has been prolonged eight times. A bill passed by Congress this year forbade such extensions.

August marks the end of the current extended term. As a result, student loan interest will accumulate in September, and borrowers will have to make their first payments following the outbreak in October.

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