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Lower Monthly Payments, Higher Hope
As the resumption of payments on federally-held student loans approaches in October, the Department of Education (DOE) has launched a new repayment plan to ease the burden for borrowers. The Saving on a Valuable Education (SAVE) plan, an income-driven repayment (IDR) option, promises lower monthly payments than previously-available IDR plans.
Designed as part of President Joe Biden’s relief efforts, the SAVE plan calculates borrowers’ payments based on household income and family size. Enrollment is now open through a user-friendly website that takes just about 10 minutes to complete the application process.
A DOE spokesperson hailed the SAVE Plan as the “most affordable student loan repayment plan ever created,” emphasizing its alignment with President Biden’s commitment to supporting students and borrowers while alleviating the weight of student loan debt on American families.
Under the SAVE plan, borrowers could see their previous monthly payments reduced by half; some may even have zero monthly bills. This initiative will replace the Revised Pay As You Earn Repayment Plan (REPAYE), reducing the portion of discretionary income required to be paid from 10% to just 5%.
The DOE launched a website over the weekend that allows borrowers to enroll in the Saving on a Valuable Education (SAVE) plan, a new kind of income-driven repayment plan that offers lower monthly payments than previously-available IDR plans.https://t.co/uuoszJr1Ib pic.twitter.com/mgJBUkntbJ
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One of the most remarkable features of the SAVE plan is its benefit for those earning less than $15 per hour, as they will not be required to make any payments at all. Higher education expert Mark Kantrowitz praised the SAVE plan, likening it to a grant for borrowers.
While some aspects of the plan, such as the change from 10% to 5% of discretionary income, will take effect next summer due to regulatory timelines, students can start enrolling now. By signing up this summer, borrowers can ensure their application is processed before student loan repayments resume in October.
Additionally, borrowers who participate during the beta application period will not need to re-enroll later, providing further ease and convenience.
The introduction of the SAVE plan represents a positive step towards easing the financial burden for student loan borrowers, aligning with the Biden administration’s commitment to supporting students and making higher education more accessible for all. It offers significant relief to borrowers and paves the way for a more affordable and manageable repayment journey. With this new initiative in place, many students and families will find the path to a valuable education more attainable than ever before.
