The Supreme Court struck down U.S. President Biden’s Student Debt Relief Plan which left borrowers with some options. Biden announced a yearlong “on-ramp” grant, loan cancellation under the Higher Education Act, and the revision of REPAYE.
According to Pesce, the pause on monthly payments due to the COVID-19 pandemic will end by September 1. The first payment will be due sometime in the month of October. Fortunately, despite the Student Debt Relief Plan being blocked, U.S. President Joe Biden announced that the administration will provide a 12-month-long “on-ramp” grant to student borrowers who may struggle with making payments. This suggests that if a student borrower misses a monthly payment, they will not be considered a delinquent from October 1 this year to September 30, 2024.
Higher Education Act
An article in The New York Times states that on June 30, the White House announced its authority to provide loan cancellation under the Higher Education Act following the cancellation of the Student Debt Relief Plan. However, this initiative may take at least months and its success is subject to legal challenges. In addition, its scope and the number of individuals who could benefit from it is not yet determined.
SAVE Repayment Plan
Furthermore, the Biden administration also intends to revise its current income-driven plan called “REPAYE” and rename it as “SAVE” following the cancellation of the Student Debt Relief Plan. The Department of Education announced its initial proposal last January. Nonetheless, compared to the original REPAYE plan, the SAVE plan intends to decrease the undergraduate borrowers’ payments from 10% to 5% of their discretionary income and 15% in other repayment plans.