More than 331,000 Californians are enrolled in President Joe Biden’s new student loan repayment plan. That number could grow as the Education Department reviews more applications and embarks on an awareness campaign.
Nationwide, over 4 million student loan borrowers are on the Saving on A Valuable Education plan, which is based on the enrollee’s earnings and household size. And since July 30, almost one million people have applied for the SAVE plan.
“Millions of borrowers are already benefiting from enrollment in the SAVE plan,” said Secretary of Education Miguel Cardona, “and I’m thrilled to see so many Americans submitting applications every day so that they, too, can take advantage of the most affordable student loan repayment plan in history.”
Most of the people on the SAVE plan were automatically transferred from a different income-driven plan called Revised Pay As You Earn.
Under the SAVE plan, a borrower who makes less than $15 an hour does not have to make monthly payments. Those who earn more could save up to $1,000 a year compared to other plans. And borrowers won’t see interest inflate over unpaid interest so long as they make their monthly payments.
Other parts of the plan will be effective next summer. Payments will be sliced by as much as half for undergraduate borrowers. It would also shorten the time to debt forgiveness for some borrowers, lowering it to 10 years for those who took out smaller loan amounts. After monthly payments, normally about 20 years for income-driven repayment plans, remaining debt is relieved.
Federal loan payments start Oct. 1 after being paused during the coronavirus pandemic. Interest began accumulating Sept. 1.
The Internal Revenue Service reviews their income so members don’t need to reapply or recertify every year. The Education Department is collaborating with grassroots organizations to spread the word about SAVE before payments begin next month.
Biden touted the new income-driven repayment plan after the Supreme Court downed his attempt to forgive up to $20,000 for some low- and middle-income borrowers.
Reducing federal student loan debt has been a hallmark of the Biden administration’s campaign. It has approved more than $177 billion in relief for 3.4 million borrowers.