President Biden’s New SAVE Plan May Cut Your Student Loan Debt In Half
For millions of Americans, the student loan pause has been a sigh of relief.
However, payments are sadly resuming in September, and SCOTUS recently struck down the president’s debt relief plan.
The situation left college grads with the same financial strain they’d been experiencing before the pandemic.
Luckily, paying your loans will become much easier thanks to the Saving on a Valuable Education (SAVE) plan.
This new student loan program will reduce your monthly payments and make a lasting difference to loan borrowers nationwide. Let’s examine the plan’s details and how you can benefit from these new changes!
What is the SAVE Plan?
Before diving into the details of how the SAVE plan can help you, let’s briefly review what it is.
Simply put, this is the Biden administration’s strategy for making federal student loan debt manageable for everyone.
The plans currently available are too high for many borrowers, especially if they’re working or middle-class. Even those who can afford to pay their loans might have to put off major milestones like home ownership.
But with the SAVE plan, you could see these payments drop by a whopping 50%. In some cases, you may not have to pay anything at all.
Let me explain.
As it stands now, anyone making above 150% of the national poverty level ($20,385 for a single person) needs to pay at least 10% of their discretionary income.
Now, the Biden Administration has pushed the threshold up to 225% of the poverty level, or $32,800 for individuals. The total amount you’ll need to pay will be reduced to 5% of your discretionary income.
You can also say goodbye to those pesky interest fees. As long as you make your monthly payments (even if it’s $0), you won’t have to worry about your balance growing any longer.
To many borrowers, the SAVE plan is one of the best ways to balance their loans with other financial goals!
Who’s Eligible For This Plan?
The SAVE plan includes all borrowers repaying their loans, so there’s a good chance you qualify for this new plan.
Moreover, you may not have to pay another dime if your original loan balance was $12,000 or less. This plan includes a debt forgiveness clause that erases your loan balance after ten years of payments.
When Will The SAVE Plan Go Into Effect?
We’d all prefer some student relief to get here ASAP. Fortunately, the Biden-Harris administration wants to introduce this new program as quickly as possible and to as many borrowers that need it.
The SAVE plan is set to roll out this summer before your first monthly payment is due. If you’re already enrolled in the REPAYE plan, you’ll automatically be enrolled in SAVE once it launches.
Those who haven’t signed up or cannot start paying immediately will get a 12-month “on-ramp” period while adjusting without any penalties.
The Bottom Line
The Biden Administration’s new SAVE Plan offers much-needed help to those struggling to make monthly student debt payments.
With payments being slashed by 50% and the promise of debt forgiveness for some, it’s a massive step towards making college an investment rather than a financial liability.
Keep an eye out for when the SAVE plan launches this summer. Remember, every dollar you save on loans can go towards building a brighter financial future.
Remember, the goal of this program is to make your student loans manageable for you. Sign up for a payment plan immediately and take advantage of this new program today!
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