No president has fought harder than President Biden for student loan relief, and he hasn’t done it yet. President Biden and Vice President Harris will not allow Republican elected officials to succeed in denying hardworking Americans the relief they need.
In light of the Supreme Court ruling this morning, President Biden and his administration There are two steps already in place this afternoon that aim to provide debt relief to as many borrowers as possible as quickly as possible and to support student loan borrowers.,
- The Secretary of Education, using the Secretary’s authority under the Higher Education Act, initiated a rulemaking process with the aim of opening up an alternative path to debt relief for more working and middle class borrowers.
- The Department of Education (Department) has finalized the most affordable repayment plan ever, ensuring that borrowers will be able to avail of the scheme before loan payments become due this summer. Under this scheme, many borrowers will not have to make monthly payments. Those who do this will save over $1,000 per year.
Further, to protect the most vulnerable borrowers from the worst consequences of missed payments after resumption of payments, The department is setting up a 12-month “on-ramp” for repayment from October 1, 2023 to September 30, 2024, so that financially vulnerable borrowers who miss monthly payments during this period are not delinquent, as the credit The bureau has been informed. Placed in default, or sent to debt collection agencies.
These actions reflect the President’s belief that education beyond high school should be the ticket to the middle class. It also builds on the unprecedented steps taken by President Biden and his administration to make college more affordable for working and middle-class families and to make federal student loans more manageable. The Biden-Harris administration has:
- Achieved the largest increase in Pell Grants in a decade.
- Broken student loan programs like public service loan forgiveness were fixed so borrowers actually get the relief they deserve.
- More than $66 billion in loan cancellations were approved for 2.2 million borrowers nationwide, including public service workers and those defrauded by their colleges.
Debt relief for as many borrowers as possible, as quickly as possible
The President is committed to providing relief to low and middle income borrowers. For many Americans, a ticket to the middle class is out of reach because of unmanageable student loan debt. COVID-19 has added to that challenge – jeopardizing the financial security and future of millions of borrowers due to the economic damage caused by a once-in-a-century pandemic.
department today initiative to make rules Using the Education Secretary’s authority under the Higher Education Act, to open up an alternative route to debt relief for more borrowers. The department issued a notice, which is the first step in the process of issuing new rules under this so-called “interactional rule-making” process. The notice announces a virtual public hearing on July 18 and seeks written comments from stakeholders on the topics to be considered.
Following the public hearing, the Department will finalize the issues to be addressed through rule-making and begin a negotiated rule-making session this autumn. The department will complete this manual as soon as possible.
lower monthly payment
The Biden-Harris administration today also finalized the most affordable repayment plan ever, called the Savings on a Valuable Education (SAVE) plan. This income-driven repayment plan will cut borrowers’ monthly payments in half, allowing many borrowers to make $0 monthly payments, saving all other borrowers at least $1,000 per year, and ensuring that borrowers pay off unpaid interest Don’t see the balance increase.
Specifically, the plan will:
- For graduate loans, reduce the amount borrowers must pay each month from 10% to 5% of discretionary income.
- Raise the amount of income that is considered non-discretionary income and therefore protected from repayment, guaranteeing that no borrower earns less than 225% of the federal poverty level – up from $15 for a single borrower equal to the annual equivalent of the minimum wage. Pay monthly under this plan.
- Forgive loan balances after 10 years of payments instead of 20 years for borrowers with an original loan balance of $12,000 or less. The department estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.
- Do not charge borrowers unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will increase as long as they make their monthly payment – even if that monthly payment is $0 because their income is low Is.
All repaying student borrowers will be eligible to enroll in the SAVE plan. They will be able to enroll later this summer, before any monthly payments are due. Borrowers who sign up for or have already signed up for the current Revised Pay As You Earn (Repayment) scheme will automatically be enrolled in SAVE once the new scheme is implemented. To learn more about the new SAVE plan, visit Education Department website.
Ensuring Support for the Most Risky Borrowers
To protect the most vulnerable borrowers, the department is creating a temporary “on-ramp” to protect borrowers from the harshest consequences for late, default or partial payments for up to 12 months. While payments will be due and interest will accrue during this period, interest will not be capitalized at the end of the on-ramp period. Additionally, borrowers will not be reported to credit bureaus, considered in default, or referred to collection agencies for late, missed or partial payments during the on-ramp period. Future monthly bills for borrowers not enrolled in the Income-Driven Repayment Plan will be automatically adjusted to reflect the interest accrued during those months.
Borrowers who can make payments should do so, but this on-ramp period gives borrowers who cannot make payments immediately the necessary time to adjust, allowing them to eventually make their monthly payments and meet their financial obligations on their loans. are able to fulfill. Borrowers are not required to take any action to qualify for this on-ramp.