New Income-Driven Student Debt Repayment Plan: Biden Administration Is Launching Beta Website!

The Biden administration is launching a beta website for its new income-driven student debt repayment plan, known as the Saving on a Valuable Education (SAVE) plan.

New Income-Driven Student Debt Repayment Plan: Biden Administration Is Launching Beta Website! (PHOTO: NBC News)

New Income-Driven Student Debt Repayment Plan

This new income-driven student debt repayment plan comes as a response to the Supreme Court‘s decision to strike down President Joe Biden‘s student debt forgiveness initiative. The SAVE plan aims to improve the federal student loan system and reduce the burden of student loan debt on American families, CNN reported.

With the beta website now live at https://studentaid.gov/idr/, federal student loan borrowers can begin submitting applications for the program. The enrollment process is estimated to take 10 minutes, with much of the required information automatically populated using data from the IRS. Borrowers will only need to apply once, and the approval process is expected to take a few weeks.

The new income-driven student debt repayment plan calculates monthly loan payments based on income and family size, potentially resulting in payments as low as $0 for some borrowers. The income threshold to qualify for $0 payments has been increased to 225% of federal poverty guidelines, making over a million additional borrowers eligible for this option.

Additionally, the new income-driven student debt repayment plan offers borrowers the opportunity to have their remaining debt canceled after making at least 10 years of payments, a significant change from previous plans. Unpaid interest will not accrue for borrowers who make their full monthly payments.

READ ALSO: New Student Debt Repayment Plan SAVE To Lower Monthly Payments, Cancel Loan Balances

New Income-Driven Student Debt Repayment Plan Comes With Cost

However, the new income-driven student debt repayment plan does come with a substantial cost to the federal government, estimated to range from $138 billion to $361 billion over 10 years, depending on how many borrowers sign up. This is lower than the expected cost of Biden’s previous student loan forgiveness program, which was projected to cost about $400 billion.

The full website launch will occur in August, and the Department of Education will closely monitor its performance during the beta period to address any potential issues. As the federal student loan payments are set to resume in October after a pause due to the pandemic, the new income-driven student debt repayment plan seeks to provide significant relief to borrowers and improve the overall student loan system.

READ ALSO: Overhauling Debt Payment: Millions Of Student Borrowers Will Get The Most Affordable Repayment Plan