Interest wont pile up as long as borrowers make regular payments. Millions of people will have payments of $0. And starting in 2024, undergraduate loan payments will be reduced by half. – The Biden administration calls it a “student loan safety net.” Opponents call it a backdoor attempt to make college free. And it could be the next battleground in the legal fight over student loan relief.
to cancel debt and also shifted attention to the lesser-known initiative, calling it “the most affordable repayment plan ever.” The typical borrower who enrolls in the plan will save $1,000 a month, he said. Emboldened by the Supreme Court's decision on cancellation, some opponents say it’s a matter of time before the repayment plan also faces a legal challenge.The U.S. Education Department offers several plans for repaying federal student loans. Under the standard plan, borrowers are charged a fixed monthly amount that ensures all their debt will be repaid after 10 years.
Right away, more people will be eligible for $0 payments. The new plan won’t require borrowers to make payments if they earn less than 225% of the federal poverty line — $32,800 a year for a single person. The cutoff for current plans, by contrast, is 150% of the poverty line, or $22,000 a year for a single person.As long as borrowers make their monthly payments, their overall balance won't increase.
It will be available to all borrowers in the Direct Loan Program who are in good standing on their loans.Supporters say Biden’s plan will simplify repayment options and offer relief to millions of borrowers. The Biden administration has argued that ballooning student debt puts college out of reach for too many Americans and holds borrowers back financially.
It’s a process that’s commonly used by administrations from both political parties. But critics question whether the new plan goes further than the law allows.