Nearly 5.5 million federal student loan borrowers have enrolled for President Biden’s new repayment option.
Nearly 5.5 million federal student loan borrowers have enrolled in what the Biden administration calls “the most generous” repayment option ever offered, federal officials said on Wednesday.
The repayment plan, dubbed the Saving on Valuable Education (SAVE) plan, went into effect in August as part of President Joe Biden’s regulatory effort to dramatically reduce monthly obligations for student borrowers who aren’t earning very much, with many borrowers seeing their bills shrink to practically nothing.
According to the latest update from the U.S. Department of Education, about 2.9 million of the SAVE plan’s current enrollees have incomes that are low enough that they have monthly payments of $0.
The updated SAVE enrollment figure includes 1.8 million borrowers who have newly signed up for the program, as well as another 364,000 borrowers who were automatically switched to SAVE because they had already been in one of the existing income-driven repayment (IDR) plans that the Biden administration seeks to replace with SAVE.
The new figure is based upon enrollment in the program as of Oct. 15. It reflects an increase from the the 4 million borrowers that the Education Department said were enrolled in the plan at the beginning of September.
Overall, borrowers are repaying $300 billion in federal student loans on the plan. That represents about 19 percent of the $1.6 trillion in outstanding debt from the federal student loan portfolio.
One of the biggest differences between the SAVE plan and IDR plans is that the amount of income incurring no charge, or protected income, rises from 150 percent above the federal poverty guidelines to 225 percent. Under the SAVE plan, payment also drops from 10 percent of the difference between earnings and protected income to 5 percent.
In practice, this means a single person who earns less than $32,800 a year is required to pay $0 a month. The same applies to a family of four that has an annual income less than $67,500.
By Bill Pan
