The Biden administration has rolled out a new income-driven repayment plan for student loans following the US Supreme Court’s decision earlier this year to strike down the White House’s previous student loan forgiveness plan.
The program, known as SAVE (Saving on a Valuable Education), is based on family size and income. It opened to any student borrower with a direct loan in good standing, including subsidized, unsubsidized, and consolidated loans on Tuesday. It’s expected to save participants $1,000 a year on average, while ensuring that low-earners will not have to make any payments, according to the White House.
“Monthly payments will be based on income, rather than their total student loan balance,” Vice President Kamala Harris said in a statement Tuesday. “In addition, as long as you make the monthly payments required under your plan, your loan balance will no longer grow because of unpaid interest — making sure that you make progress on paying down your debt.”
The program’s rollout comes ahead of the resumption of student loan payments this fall as the pandemic-era freeze expires. The Biden administration previously canceled $39 billion in federal student loans for more than 804,000 borrowers by accounting for payments made under income-driven repayment plans that it argues should have qualified toward loan forgiveness, but were previously unrecognized by loan servicers that collect payments.
[Related: Biden’s new plan to forgive $39 billion in student loans, explained]
Here’s what you need to know about how the new program works and how to access it.
Who is eligible and how the plan works
The SAVE plan is expected to be available to more than 20 million borrowers and is already in effect.
As of Tuesday, borrowers will not have to make payments if they have an income that is 225 percent of the federal poverty guidelines or less — that is, if they make less than $32,800 for individuals and $67,500 for a family of four. That…
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