While the Biden administration’s student loan debt relief plan is held up in court, the Education Department is moving ahead with another student debt revamp to lesson the burden for borrowers.
Under the proposal, the administration of President Joe Biden would overhaul one of the existing income-driven repayment plans, known as Revised Pay As You Earn or REPAYE, which caps borrowers’ bills at a percentage of their discretionary income.
The new REPAYE plan would aim to reduce monthly obligations by as much as a half, according to a fact sheet from the Education Department. It says that a typical graduate from a four-year public university could save around $2,000 annually under the new plan.
Currently, the most affordable income-driven repayment plan requires borrowers to pay 10% of their discretionary income each month to their student debt. This change would lower that ceiling to 5%.
According to Mark Kantrowitz for CNBC, a higher education expert, the plan should officially be available July 1, 2024, but some parts may be implemented sooner.
As for the broader student loan cancellation plan, the Supreme Court is expected to hear the case next month.
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