An estimated 20 million borrowers could benefit from the Biden administration’s student loan debt forgiveness plan.
But how do you know if you are eligible?
The income-driven repayment program, Saving on A Valuable Education Plan, will allow borrowers to pay only 5% of their discretionary income.
Initially launched in 2023, the Biden administration sought to use the SAVE Plan to help not only cut down monthly costs, but also provide early forgiveness for low-balance borrowers, stop growth due to unpaid interest, and ultimately bring down payments to $0 per month.
Now, with this percentage cut in half, many borrowers will also see a similar reduction in their monthly payments.
What’s in the Saving on a Valuable Education Plan?
A SAVE plan helps determine how much a resident pays every month based on overall income and family size, and then forgives any remaining loan balances after a certain period.
Under this plan, borrowers were expected to pay 10% of their income every month. This percentage was determined by the difference between one’s adjusted gross income and an income that falls into 225% of the federal poverty line, according to the U.S. Department of Health and Human Services.
For example, if you make exactly or less than $32,800 per year, your estimated payment will be $0 per month. Or, if you are a single borrower and make $50,000 per year, your payment will be close to $143 per month.
Who’s eligible for a SAVE plan?
This new rate will apply to those currently enrolled in a SAVE plan and with undergraduate and/or graduate student loans.
In general, SAVE plans are accessible for federal student borrowers with direct student loan debts. This can include direct subsidized and unsubsidized loans, among others.
More:Who’s getting student loan forgiveness after $7.7 billion in relief? Here’s a breakdown
How much will you save?
Earlier this year, the Biden administration continued to expand benefits. This included giving student loan borrowers who owe $12,000 or less the chance to have charges cleared after 10 years of payment.
Then, last May, Biden’s administration declared that an additional total of $7.7 billion in loan forgiveness had been approved for over 160,000 eligible borrowers. This included those enrolled in a SAVE plan, as well as those receiving Public Service Loan Forgiveness and in similar income-driven repayment programs.
According to the U.S. Department of Education, this approval raised the total amount of loan forgiveness to roughly $167 billion for 4.75 million residents in the U.S. – including those living in Delaware.
A recent Department of Education report found that 3,030 borrowers in the First State were approved for student loan forgiveness under a PSLF plan; 1,460 under SAVE; 3,170 under an IDR adjustment; and 4,630 borrowers for both IDR and SAVE from October 2021 to May 2024.
As of this April, close to 8 million borrowers have been enrolled in a SAVE plan – a little over 4 million of whom now have $0 payments.
What to know:Biden’s latest student-loan forgiveness plan brings questions for borrowers
Related:Biden promises student loan relief as early as this fall through new plan
How do you apply for a SAVE plan or IDR plan?
Borrowers interested in enrolling in a SAVE or an IDR plan can do so online at studentaid.gov/idr/.
While there is no set income restriction to be eligible for a SAVE plan, a more in-depth list of requirements is available on the Federal Student Aid website.
