After the Supreme Court strikes down President Joe Biden’s ambitious plan to eliminate $400 billion in student loan debt, the federal government is rolling out Biden’s new student loan repayment plan. Named the SAVE Plan, it aims to bring relief to over 800,000 borrowers, including 64,000 Texans, who will collectively have $39 billion in student debt forgiven.
Biden’s new student loan repayment plan applies to most federal student loans, regardless of when they were taken out. (Photo: Locker Dome)
Biden’s New Student Loan Repayment Plan Qualification and Eligibility
According to Texas Standard, Biden’s new student loan repayment plan is designed to be inclusive, making most federal student loan borrowers eligible. However, individuals with Parent PLUS loans will generally not qualify.
Apart from that, the majority of borrowers will be able to avail themselves of the benefits offered by this plan. One significant departure from existing income-driven plans is the approach to interest accrual.
Under Biden’s new student loan repayment plan called the SAVE Plan, if the calculated monthly payment falls below the amount of interest that accumulates, the remaining interest will be forgiven. This stands in contrast to the older plans, where borrowers were often burdened with growing balances if their payments failed to cover the accrued interest.
Applicants need not worry about the timing of their loan acquisition. Biden’s new student loan repayment plan applies to most federal student loans, regardless of when they were taken out. This means that loans acquired as far back as 1994 are just as eligible as those acquired in the current year.
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Cost of Biden’s New Student Loan Repayment Plan
Though projections have been made regarding the cost of Biden’s new student loan repayment plan, it’s essential to recognize that these estimates are subject to change over time.
The federal government has explored potential offsets in other areas to mitigate the overall financial impact.
The subject of student loan forgiveness remains a contentious issue. While the Biden administration has made efforts to aid vulnerable student loan borrowers, some individuals express concerns about rewarding those who took out loans irresponsibly or who are capable of repaying their debts.
The broader discussion encompasses questions about the wisdom of taking out loans for education and whether forgiving student loans on a large scale is the best policy approach.
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