Website launched for Biden administration's new income-driven student loan repayment plan in the United States

Joe Biden administration has launched a beta website for its new income-driven student loan repayment plan. The borrowers can use the website to submit applications for the program. Federal student loan borrowers can access the beta website at https://studentaid.gov/idr/.

After the Supreme Court blocked President Joe Biden’s student debt forgiveness initiative in June, The SAVE, or Saving on a Valuable Education, plan was finalised. The new plan can help lower monthly loan payments for some student borrowers and reduce the amount they pay back over the lifetime of their loans. Income and family size will play a role in the recalculation of Income-driven repayment (IDR) plans.

“Part of the president’s overall commitment is to improve the student loan system and reduce the burden of student loan debt on American families,” said a senior administration official.

“The SAVE plan is a big part of that. It is important in this moment as borrowers are getting ready to return to repayment,” added the official.

The application process on the website is estimated to take 10 minutes. Many sections can be automatically filled with the prior information that the government is having, including tax returns from the IRS, administration officials said.

“We will be able to show borrowers their exact monthly payment amount and give them the ability to choose the most affordable repayment plan for them,” said one official as quoted by CNN.

In an improvement over past systems, borrowers will need to apply one time and not yearly. After the submission of their application, users will receive a confirmation email. The approval process may take a few weeks and can be tracked online.

Interestingly, borrowers already enrolled in the federal government’s REPAYE, or Revised Pay As You Earn, income-driven repayment plan will be automatically switched to the new plan.

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However, the full website launch is expected to happen in August. Applications being submitted in the existing beta version will not require to be resubmitted.

After the IDR application under The SAVE plan, which applies to current and future federal student loan borrowers, some monthly payments may come out to be as small as $0. The income threshold to qualify for $0 payments has been increased from 150% to 225% of federal poverty guidelines, which calculates to an annual income of $32,805 for a single borrower or $67,500 for a family of four. Moreover, with the new plan, unpaid interest will not accrue if a borrower makes their full monthly payments.

Notably, borrowers have to start making federal student loan payments in October after it was paused for more than three years because of the pandemic.

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