Along with his plans to grant student loan debt forgiveness to millions of borrowers, President Joe Biden is moving ahead with a plan to lower student loan repayments and stop their balances from growing because of an accumulation of unpaid interest.
Under the proposed changes, student loan borrowers on the Revised Pay As You Earn (REPAYE) plan would offer $0 monthly loan repayments for individual borrowers who make less than about $30,600 annually and for borrowers in a family of four or more that makes less than about $62,400 annually. The plan would also cut monthly payments in half for undergraduate loan borrowers who do not fall under a $0 monthly loan repayment option. Further, the Biden administration plan would stop borrowers’ balances from growing as a result of accumulating unpaid interest, so long as they make their monthly payments.
“Today the Biden-Harris administration is proposing historic changes that would make student loan repayment more affordable and manageable than ever before,” Cardona said. “We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed. These proposed regulations will cut monthly payments for undergraduate borrowers in half and create faster pathways to forgiveness, so borrowers can better manage repayment, avoid delinquency and default, and focus on building brighter futures for themselves and their families.”
Biden Admin Defends Student Debt Cancellation
The Biden administration’s student debt cancellation plan has been struck down by multiple federal district and appeals courts. The debt cancellation effort is now the subject of two different cases before the U.S. Supreme Court.Opponents See $Billion Price Tag
As with opposition to Biden’s debt cancellation plan, opponents point to the costs that will be passed on to taxpayers with this revised student loan repayment plan. The Biden administration estimates the repayment plan would cost nearly $138 billion over the next decade, while some critics have put the true cost closer to $200 billion [AP citation].The Biden administration believes the student debt cancellation plan will also cost about $30 billion a year over the next 10 years, for a total cost of $300 billion over the next decade.
Even some on the left have questioned the prudence of the idea, saying it’s so generous that it effectively turns student loans into grants that don’t need to be repaid. [AP citation].
The Associated Press contributed to this article.
