The Save Plan
President Joe Biden has not swayed when it comes to relieving Americans of college debt. Regardless of what the Supreme Court thinks, Biden ensured his plan was successful. On Tuesday, August 22, Biden and Kamala Harris announced the passing of the SAVE Plan. The SAVE Plan is the next step in Biden’s mission to remove college debt from the minds and pockets of millions of Americans.
The original college forgiveness plan proposed by Biden wasn’t passed by the Supreme Court and a few state officials. However, the SAVE Plan is well underway and equivalent to: Saving on a Valuable Education. This new repayment loan is an income-driven repayment plan that calculates loan payments using a borrower’s income and family size rather than their loan balance and will forgive some remaining balances sooner.
According to the Federal Student Aid site, undergraduate borrower’s payments change from 10% of their discretionary income to 5%. Additionally, people with both graduate and undergraduate loans will pay a weighted average somewhere between 5% and 10% of their income depending on their original principal balances. The plan also works to eliminate remaining interest, meaning as long as you make your monthly payment, your loan balance won’t grow as a result of unpaid interest; so, if $50 of interest accumulates each month, but you have a $30 payment, the remaining $20 would not be charged.
“This is real money President Biden is putting back into the pockets of working families,” United States Secretary of Education, Miguel Cardona said of the savings borrowers may see from the SAVE Plan. “When borrowers struggle to make ends meet, we’re not going to kick them while they’re down. SAVE is the first true student-loan safety net in the country.”
The Save Plan will help millions as the impact of student debt can have altered plans, and with the hike in interest rates, the plan will help them dodge those extra fees. According to www.privatestudentloans.com, the current rate of federal student loans for undergraduate students is now 5.50% — up from 3.73% two years ago. Private student loan rates have also increased considerably, with 10-year fixed-rate loans going from a record low of 4.87% last year to 7.56% today.
“The nightmare of making payments and watching your loan balance get bigger and bigger will finally be over,” Cardona said on a call with reporters.
The plan will be based on income and will have zero interest attached to it. Singles that make less than $32,800 or a family of four making under $67,500 will not owe loan payments once they enroll in the plan. To qualify for not having to repay the loan, applicants need to be in good standing with their previous loans and have a history of making payments on time.
The Biden administration expects over 20 million applicants as the window for the first payment is expected sometime in October, in which people who are already enrolled in the Revised Pay As You Earn plan can expect news of having their balance lowered or removed altogether.
For more information on plan use or paying back student loans, visit WWW. StudentAid.gov.idr to learn more about the repayment loan and apply.
