Student loan forgiveness: Borrowers can now apply for new loan forgiveness program

The Saving on a Valuable Education, or SAVE, plan covers both current and future college students who take out federally backed student loans, the DOE said.

“This plan is a game changer for millions of Americans, many of whom are putting off having children, buying their first home, or even starting a business because they can’t get out from under their student loans. Student loans will be manageable,” Biden’s domestic policy adviser, Neera Tanden, said Tuesday.

While applications for the plan are open now, the benefits will not be seen until July 2024. That is the date borrowers approved for a SAVE plan will see their monthly payments cut in half for undergraduate loans, falling from 10% to 5% of disposable income, or the money left over after paying for necessities like food and rent.For those with both graduate and undergraduate loans, payments will be between 5-10% of their income, weighted based on their initial loan amounts, according to the DOE.

However, for those approved for a SAVE plan who make less than $32,805 a year, monthly payments will drop to $0 until their income increases. For a family of four, the same is true if you are making less than $67,500. The DOE says the enrollment process takes about 10 minutes, and many sections can be automatically populated with information the government has on hand, including tax returns from the IRS, administration officials said.

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