WASHINGTON–Ahead of repayments that are to begin this fall, the Biden administration has officially launched the new income-driven student loan repayment plan for borrowers.
Known as the Saving on a Valuable Education (SAVE) plan, it is being introduced just weeks ahead of when interest will begin to accrue on student loans for the first time in more than three years. Repayments will resume in October, although no financial consequences will come to borrowers if they are unable to pay for up to a year, the Hill reported.
“Starting today, millions of borrowers can reduce their monthly student loan bills by enrolling in the SAVE plan, the most affordable repayment plan in history,” Education Secretary Miguel Cardona said in a statement. “The SAVE plan is another huge step forward in President Biden’s tireless efforts to fix the broken student loan system, reduce the burden of student debt on working families, and put borrowers first.”
Website Offers Resources
According to the government, borrowers can visit a page on the Federal Student Aid website and find an application process the department said takes around 10 minutes to complete.
“Some information that may be difficult for borrowers to find for the application, such as tax returns, can automatically be inserted by the department due to information the government already has,” the department stated.
The launch of the SAVE plan comes after it has been in a beta testing phase for almost a month for officials to work out the bugs on the website, according to the Hill.
“Those who are on the Revised Pay As You Earn Repayment (REPAYE) plan or applied for the SAVE plan during the beta testing period do not need to fill out the application,” the government said. “Borrowers who miss a certain number of payments will also automatically get enrolled in the SAVE plan.”
Hurry, Says Official
A senior administration official told the Hill borrowers who want to see the benefit of the SAVE plan before payments restart should apply in the next few days. Applications will take around four weeks to process, the official said.
The administration also announced an outreach campaign to ensure borrowers are aware of the new plan, which officials say will save borrowers “millions” on monthly payments, according to the Hill.
The campaign, called “SAVE on Student Debt,” will work in partnership with numerous grassroots organizations and have a “SAVE on Student Debt Week of Action” in September to make borrowers aware of the plan, the Hill reported, adding the organizations will work to host phone banks, workshops, town halls and social media campaigns that explain the program and its benefits.
Two-Phase Rollout
The plan will have a two-phase rollout, as some of the program will be implemented this year and other aspects will not go into effect until July 2024.
This year, the income exemption for monthly payments will be raised from 150% above the poverty line to 225%, meaning more borrowers will qualify for $0 monthly payments under this plan.
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