Good news for millions of students – you can now take a break from your monthly student loan payments as lenders adjust repayment plans.
The Biden administration introduced the new SAVE plan (Saving on a Valuable Education) to help reduce the burden of student debt for borrowers. This plan is especially helpful as the cost of higher education continues to rise. As of May 21, the administration has already approved $167 billion in loan forgiveness for 4.75 million Americans.
Starting July 1, undergraduate loan borrowers under the SAVE plan will see their monthly payments reduced from 10% to just 5% of their discretionary income. Meanwhile, graduate school loan payments will remain at 10% of discretionary income.
To ensure a smooth transition to the new repayment plans, the Department of Education has directed loan servicers to cancel July payments for affected borrowers. As loan servicers finalize the adjustments, impacted borrowers will receive notifications of administrative forbearance.
The DOE is also working to ensure that borrowers receive the full benefits of the SAVE plan, with lower monthly payments capped at 5%. Borrowers may even qualify for zero payments based on their discretionary income, and no monthly interest will be charged if the payment doesn’t cover it.
Borrowers with low balances may also qualify for early forgiveness under the SAVE program. The White House has stated that borrowers with original principal amounts below $12,000 will receive forgiveness after 120 payments. For every additional $1,000 above this threshold, 12 extra payments will be required, up to a maximum of 20-25 years.
With over 8 million borrowers already registered, the SAVE plan is providing much-needed relief for those struggling with student loan debt. So, if you’re enrolled in the SAVE program, get ready to enjoy some breathing room on your monthly payments!