Biden Administration Launches Beta Website for New Student Loan Repayment Plan
President Joe Biden’s administration is rolling out a beta website for its new income-driven student loan repayment plan, according to officials. This launch comes as federal student loan payments are set to resume in October.
The plan, called SAVE (Saving on a Valuable Education), was developed after President Biden’s student debt forgiveness initiative was struck down by the Supreme Court in June. The SAVE plan aims to lower monthly loan payments for some borrowers and reduce the overall amount they will repay over the lifetime of their loans.
“The president’s commitment is to improve the student loan system and reduce the burden of student loan debt on American families,” said a senior administration official. “The SAVE plan is a big part of that. It is important as borrowers are getting ready to return to repayment.”
The beta website allows borrowers to submit applications for the program. The enrollment process is estimated to take about 10 minutes, and certain sections of the application can be automatically populated with information from the government, including tax returns. The website will also provide borrowers with their exact monthly payment amount and allow them to choose the most affordable repayment plan.
Unlike previous systems, borrowers only need to apply once, not yearly. Once the application is submitted, users will receive a confirmation email, and the approval process can be tracked online, taking a few weeks.
Existing borrowers enrolled in the federal government’s REPAYE (Revised Pay As You Earn) income-driven repayment plan will be automatically switched to the new SAVE plan.
The full website launch is scheduled for August, with applications submitted during the beta period not needing to be resubmitted. The beta phase will allow the Department of Education to monitor site performance and make necessary updates.
The new plan, which applies to current and future federal student loan borrowers, determines payments based on income and family size. Some monthly payments could be as low as $0, with the income threshold for $0 payments increased to 225% of federal poverty guidelines. This means more than 1 million additional borrowers will qualify for $0 payments. Additionally, some borrowers could have their payments reduced by half and see their remaining debt canceled after making at least 10 years of payments.
With the implementation of the new plan, unpaid interest will not accumulate if borrowers make their full monthly payments.
However, this new plan does come at a cost to the federal government. Estimates of the program’s expense range from $138 billion to $361 billion over 10 years, depending on how many borrowers sign up. In comparison, Biden’s student loan forgiveness program was expected to cost about $400 billion.
Officials note that the Education Department has created similar income-driven repayment plans in the past without facing successful legal challenges.
The beta site launch is happening as borrowers prepare to resume making federal student loan payments in October after a pause of more than three years due to the pandemic.
Since the Supreme Court struck down Biden’s effort to cancel up to $20,000 of student debt for millions of borrowers, the administration has taken other steps to help federal student loan borrowers. Earlier this month, the Education Department announced that 804,000 borrowers will have their student debt wiped away, totaling about $39 billion, after fixes were made to more accurately count qualified monthly payments under existing income-driven repayment plans.