At Extreme Investor Network, we strive to provide you with the latest updates and insights on personal finance that can help you make informed decisions about your financial future. Today, we are excited to share with you some exciting news that can potentially reduce your student loan payments starting next month.
The Biden administration has introduced a new income-driven repayment plan called the Saving on a Valuable Education (SAVE) plan, which is set to kick in on July 1. This program aims to reduce the monthly payments of millions of borrowers, making it the most affordable student loan plan ever introduced. So far, around 8 million borrowers have signed up for the SAVE plan, according to the White House.
Under the SAVE plan, borrowers will pay a share of their discretionary income each month and receive forgiveness after a set period, typically 20 or 25 years. This plan has replaced the U.S. Department of Education’s former REPAYE option, or Revised Pay As You Earn plan.
One of the key features of the SAVE plan is that it increases the income exempted from the payment calculation to 225% of the poverty line, up from 150% under the REPAYE plan. This means that single borrowers earning less than $33,900 or a family of four making less than $70,200 may see their monthly bill reduced to $0.
But the most significant benefit of the SAVE plan is the reduction in the share of discretionary income borrowers have to pay toward their undergraduate student debt each month, from 10% to 5%. This change is set to take effect soon and will result in a substantial decrease in monthly payments for many borrowers.
If you are already enrolled in the SAVE plan, you should see the decrease automatically reflected in your July bill. Borrowers with both undergraduate and graduate student loans will pay a weighted average of between 5% and 10% of their income, according to the Education Department.
To qualify for a lower payment under the SAVE plan, your total debt will generally need to be greater than a third of your annual income. Borrowers can apply for the program at Studentaid.gov. Some borrowers, including those with $12,000 or less in debt, may receive loan forgiveness in as few as 10 years under the plan.
At Extreme Investor Network, we understand the importance of staying informed about the latest developments in personal finance. By taking advantage of programs like the SAVE plan, you can potentially reduce your student loan burden and take a step towards financial freedom. Stay tuned for more updates and insights on personal finance from Extreme Investor Network.