The Biden administration is introducing a beta website for its new income-driven student loan repayment plan, called the Saving on a Valuable Education (SAVE) plan. This initiative aims to improve the federal student loan system, providing relief to borrowers as federal student loan payments are set to resume in October.
With the new SAVE plan, borrowers may be eligible for lower monthly loan payments and reduce the overall amount they need to repay. The program is designed to ease the burden of student loan debt on American families.
Borrowers can access the beta website at https://studentaid.gov/idr/ and complete the enrollment process in just 10 minutes. Most of the required information will be automatically populated using data from the IRS, making the process smoother.
Unlike previous systems that required yearly reapplication, the SAVE plan only requires a one-time application, making it more user-friendly. Once the application is submitted, borrowers will receive a confirmation email, and the approval process is expected to take a few weeks.
The new plan determines payments based on income and family size, with some borrowers eligible for payments as low as $0. The income threshold for $0 payments has been raised to 225% of the federal poverty guidelines, benefiting over 1 million additional borrowers.
The full website launch is scheduled for August, and applications submitted during the beta period won’t need to be resubmitted. The Department of Education will closely monitor site performance during this phase, and any necessary updates will be made.
Unpaid interest will not accrue for borrowers making full monthly payments under the SAVE plan. Moreover, some borrowers may see their payments reduced by half and get their remaining debt canceled after making at least 10 years of payments.
While the new plan offers relief to borrowers, it comes with an estimated cost to the federal government, ranging from $138 billion to $361 billion over ten years. This is lower than the projected cost of Biden’s previous student loan forgiveness program, which was around $400 billion.
The beta website launch is timely, as borrowers will need to begin making federal student loan payments again in October after a pause of more than three years due to the pandemic.
The Biden administration has taken several steps to assist federal student loan borrowers after the Supreme Court struck down the president’s effort to cancel up to $20,000 of student debt for millions of borrowers. Earlier this month, the Education Department announced debt forgiveness for 804,000 borrowers, wiping away approximately $39 billion worth of debt, through improvements to existing income-driven repayment plans.