The Biden administration on Tuesday announced a new college student loan repayment plan that it estimates will lower — or eliminate — monthly loan payments for more than 20 million borrowers.
For borrowers with undergraduate loans, those enrolled in the SAVE plan will have their monthly payments reduced from 10% to 5% of their discretionary income. If someone has both undergraduate and graduate loans, payments will be calculated using a"weighted average" between 5% and 10%. The department offered the example of a nurse making $77,000 a year, married with two kids, who would see monthly payments drop from $267 dollars a month to $40 a month.
Early forgiveness is another new facet of this plan, too. Borrowers with balances of $12,000 or less will see the rest of their loans forgiven after 10 years when the borrower has made 120 payments."For each additional $1,000 borrowed above that level, the plan adds an additional [one year of payments] for up to a maximum of 20 or 25 years," the department said.