By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > Loans > Biden forges ahead with new student loan forgiveness repayment plan after clearing legal hurdle
Loans

Biden forges ahead with new student loan forgiveness repayment plan after clearing legal hurdle

News Room
Last updated: 2023/08/16 at 3:37 PM
By News Room
Share
7 Min Read
SHARE

Contents
SAVE is the jewel of repayment plansStudent loan interest payments could be reduced

President Joe Biden’s path to deliver $39 billion of student debt forgiveness to borrowers paying their loans for over 20 years under a new repayment plan, cleared a legal hurdle after a federal judge dismissed a lawsuit seeking block the plan on Monday.

The lawsuit, filed in Michigan by the New Civil Liberties Alliance (NCLA) on behalf of the Mackinac Center for Public Policy and the Cato Institute, two conservative think tanks, challenged the legality of Saving on a Valuable Education (SAVE) plan.

Central to the lawsuit’s complaint was the plan’s intent to count past deferment and forbearance periods as if borrowers had made payments during that time. Borrowers will also be allowed to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.

The plaintiffs argued that canceling student debt through income-driven repayment (IDR) plans would reduce the incentive to participate in the Public Service Loan Forgiveness (PSLF) program by completing ten full years of work for qualified non-profit employers while making monthly payments. As a result, it would directly harm non-profit organizations that benefit from PSLF and undermine Congress’ goals in enacting the PSLF program.

However, Judge Thomas Ludington of the District Court for the Eastern District of Michigan dismissed the groups’ case and rejected a request that the plan be temporarily blocked. Ludington said the conservative groups did not show they would be harmed by the plan.

The Department of Education in July said it would begin notifying 804,000 borrowers that they have a collective $39 billion in federal student loans eligible for automatic discharge under the plan.  

“On Day One of my Administration, I promised to fight for hardworking families and to fix problems in the student loan system that have been failing borrowers for too long,” Biden said in a statement. “I’m proud that my Administration is delivering on that promise and has already approved over $116 billion in debt cancelation for 3.4 million Americans – no matter how many lawsuits, challenges or roadblocks Republican elected officials or special interests put in our way.”

If you have private student loans, you won’t benefit from SAVE or other government initiatives. You could consider reducing your monthly payments by refinancing your loans for a lower rate. Visit Credible to get your personalized rate in minutes.

MORE STUDENTS TURNING TO FEDERAL AND PRIVATE STUDENT LOANS TO FINANCE COLLEGE: SURVEY

SAVE is the jewel of repayment plans

Changes to the Department of Education’s income-driven repayment (IDR) plans mean student loan borrowers can expect a collective $39 billion in federal student loan debt to be forgiven. 

Under the Saving on a Valuable Education (SAVE) plan, borrowers could see monthly payments lowered to zero dollars, monthly costs cut in half and those who make payments could save at least $1,000 a year, the White House said in a statement. 

The plan was announced after the Supreme Court decided to strike down Biden’s student loan forgiveness plan. It calculates the monthly payment amount based on a borrower’s income and family size, according to the Department of Education. 

That means that for those earning $32,800 a year or less, which translates to roughly $15 an hour, their monthly payment would drop to $0 immediately. Additionally, borrowers with an original balance of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed.  

Individually, borrowers in some states could expect to get close to $55,000 of student debt wiped away, according to Scholaroo’s Student Loan Forgiveness Index.

Federal student loan relief will not benefit private student loan borrowers. If you’re having trouble paying for your private student loans, you could consider refinancing your loans to a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate without affecting your credit score. 

HOMEBUYERS ARE FINDING BETTER DEALS IN THESE CITIES, SURVEY SAYS

Student loan interest payments could be reduced

A new bill sponsored by Rep. Joe Courtney (D-Conn.) and Sen. Peter Welch (D-Vt.) seeks to refinance the interest rate of all existing federal student loans to zero percent and cap interest rates for future borrowers, according to a fact sheet on the new legislation. 

Under the so-called Student Loan Interest Elimination Act, interest payments for future student loan borrowers would be based on a sliding scale determined by financial need, with most paying nothing in interest and no student getting an interest rate above 4%.  

The Department of Education would establish a trust fund to collect payments borrowers make on their principal balance to offset the elimination of interest, the fact sheet said. 

Any money left over would be used to bulk up Pell Grant awards and provide competitive grants to support college completion and retention programs at higher education institutions, according to the legislation. 

If you hold private student loans, you could lower your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered. 

THESE TWO FACTORS COULD BE DRIVING YOUR CAR INSURANCE COSTS UP

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.

Read the full article here

News Room August 16, 2023 August 16, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
US Steel workers see hope of job security in deal with Japan’s Nippon

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

‘No timewasters please’: is setting boundaries necessary or plain rude?

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Poland votes in tight presidential election

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Kelly Ortberg: Boeing should not be an ‘unintended consequence’ of trade war

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Donald Trump’s steel tariffs prompt anger and warnings of ‘catastrophic’ job cuts in Canada

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

- Advertisement -
Ad imageAd image

You Might Also Like

Loans

This week’s personal loan rates: 3-year loans inch down while 5-year loans spike

By News Room
Loans

Fed pauses interest rate hikes in September but could raise rates again this year

By News Room
Loans

Students headed for college worried they don’t have the money to pay for it, survey says

By News Room
Loans

Student loan repayment may force some to take on more debt: Survey

By News Room
Loans

Personal loan rates inch back up for both 3- and 5-year loans

By News Room
Loans

Recession could hit in October if unemployment rises slightly: mathematical model

By News Room
Loans

Yield curve pioneer warns Fed not to raise rates, predicts possible recession in 2024

By News Room
Loans

Personal loan interest rates fall for 5-year loans

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?