December 19, 2023 at 11:06 pm #28272December 19, 2023 at 11:08 pm #28279
The student loan forgiveness program Biden proposed, which would have forgiven up to $20,000 per borrower, no longer exists and you cannot apply for it. Instead, you can apply for existing forgiveness programs that provide relief for public service workers, teachers, nurses, people with disabilities, military service members, and veterans.
Last year President Joe Biden announced student debt forgiveness of up to $20,000 per borrower for individuals making less than $125,000 and married couples making less than $250,000. However, on June 30, 2023, the Supreme Court struck down Biden’s plan which would have impacted about 90% of borrowers. Those who had already been approved for forgiveness will not get it. Originally, borrowers had until December 2023 to apply for Biden’s forgiveness plan, but that is no longer an option.
Soon after the Supreme Court’s decision, the Biden administration began working towards a Plan B, which is still being developed. They also announced a new income-driven repayment (IDR) plan called Saving on a Valuable Education (SAVE), which replaced the existing Revised Pay As You Earn (REPAYE) plan. Those who had enrolled in the REPAYE plan will automatically be moved to the SAVE plan.
Borrowers who enroll in this plan will have their monthly payment reduced by 50% and may leave some with no monthly bill. Instead of paying 10% of your discretionary income (income you have at your disposal after paying essentials like rent, utilities, insurance, and food) under REPAYE, SAVE requires you to pay only 5%. However, this part of the plan will not kick in until next year. Under SAVE, borrowers will qualify for forgiveness after 10 years instead of 20 and interest will not accrue as long as a borrower makes their scheduled monthly payment.
You can sign up for this plan on the Department of Education’s website.
You can still apply for existing loan repayment plans like:
- The Teacher Loan Forgiveness plan is for those who have taught full-time for five complete consecutive years in a low-income school.
- The Public Service Loan Forgiveness Plan if you work at a government agency and have made 120 qualifying payments while working for a qualifying employer.
- Income-driven repayment plans under which you qualify for loan forgiveness if you have been making payments typically for 20 or 25 years.
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