Over 3 Million Federal Student Loan Borrowers Benefit from $0 Monthly Payments Under Biden’s SAVE Plan

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This plan, known as the Saving on a Valuable Education (SAVE) program, has enrolled 5.5 million federal student loan borrowers as of October 15.

Over 3 Million Federal Student Loan Borrowers Benefit from $0 Monthly Payments Under Biden's SAVE Plan
Over 3 Million Federal Student Loan Borrowers Benefit from $0 Monthly Payments Under Biden’s SAVE Plan ( Photo: Zerohedge )

Approximately 3 million federal student loan borrowers are benefiting from President Joe Biden’s newly implemented income-driven repayment plan, which allows them to make $0-a-month loan payments, as per the latest Department of Education data

Surprisingly, over half of those participants qualified for $0 monthly payments due to their income levels. On average, all SAVE participants have seen their monthly bills reduced by $102, resulting in annual savings of $1,224 compared to pre-SAVE levels. This new plan is delivering on its promise to provide substantial relief, particularly to borrowers with high loan balances relative to their income, according to Betsy Mayotte, the president of The Institute of Student Loan Advisors.

The SAVE program, introduced in June by President Biden, replaces his initial plan to cancel up to $20,000 of federal student debt per federal student loan borrower, which the U.S. Supreme Court blocked. This income-driven repayment plan calculates monthly payments based on a federal student loan borrower’s income rather than their debt, making it more generous than previous plans. The threshold for $0 payments under SAVE is set at an income of $32,800 per year for single borrowers or less than $67,000 for a family of four.

Federal student loan borrowers who continue to make on-time payments under SAVE can have any interest that would increase their loan balance waived

However, there have been issues with the plan’s rollout, including incorrect bills sent to some federal student loan borrowers by loan servicers. The Education Department is working to address these errors. In July 2024, it plans to introduce additional benefits, including a reduction in payment amounts to 5% of discretionary income and student loan forgiveness for those who have made on-time payments for 10 years or more, with balances of $12,000 or less receiving full forgiveness. Other benefits, such as consolidation, forbearance, and automatic enrollment, are also scheduled to be implemented in July 2024.

 

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