On January 10, U.S. President Biden has proposed a new loan forgiveness plan for American students. In this article, read and find everything you need to know about the new plan!On January 10, U.S. President Joe Biden has proposed a new plan regarding student loan repayment. The new plan amends a current loan repayment plan that limits borrowers’ bills at a percentage of their discretionary income. This amendment intends to make the loans more affordable to reimburse.
According to Nova, the current loan repayment plan requires 10% of borrowers’ discretionary income to be paid every month. However, under the new plan Revised Pay As You Earn Repayment Plan (REPAYE), only 5% is required to be paid. Higher education expert Mark Kantrowitz says the new REPAYE plan is expected to be officially available on July 1 next year.
About the New REPAYE Plan
According to Nova, under the current loan repayment plan, the discretionary income is calculated as income earned above 150% of the federal poverty level. This means that single borrowers make payments based on an income of more than $21,900. For example, a borrower who earns $40,000 every year would have to pay a monthly student loan of around $151.
However, under the new REPAYE plan, borrowers will not have to make payments until the income earned reaches 225% of the federal poverty level. This means that borrowers will have to make payments only if the income based is around $32,800. For example, a borrower who earns $40,000 every year would have to pay a monthly student loan of $30 only. A borrower who earns $90,000 every year can pay a monthly student loan of $238 instead of $568. Accordingly, those who earn around $32,800 will have to make no payments at all.