Biden Proposes New Student Loan Plan – Here’s What You Should Know!

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!

Students on Student Loan Plan [Photo: Marketplace.org]

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.

READ ALSO: 2023 Child Tax Credit: What Is It And How To Qualify

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.

READ ALSO: 11-Year-Old Boy Accidentally Shot During A Fight Between Two Girls In Dallas