Biden Administration Proposes New Form of Student Loan Relief

Terry Savage, Tribune Content Agency on

A new proposal by the Biden administration would dramatically cut monthly payments in half, with monthly payments as low as zero for many borrowers, while completely wiping out the remaining balance for some borrowers after 10 years of payments.

Unlike the administration's previous plan granting selective student-debt forgiveness, this is merely a generous reworking of the Revised Pay As You Earn (REPAYE) plan, a type of income-driven repayment plan for federal student loans. Thus, it is less likely to make its way to the Supreme Court, which will hold hearings at the end of February on the legality of Biden's original $10,000 forgiveness plan.

Here are some of the specifics:

Current programs base payments on 10% or 15% of the borrower’s discretionary after-tax income. The new program would lower that calculation to 5% of the borrower’s discretionary income. In effect, that would at least cut payments in half for most borrowers.

Currently, borrowers who earn less than 150% of the federal poverty level (around $21,900) qualify for the REPAYE plan. Under the new proposal, borrowers wouldn’t need to make payments until income earned hit 225% of the federal poverty guideline, or about $32,800.

Anyone earning less than that $32,800 level would have a zero monthly payment.


But according to student loan expert Mark Kantrowitz, even those with much higher incomes will save under the new formula. He explains that someone earning more than $90,000 and currently paying $568 per month would see her monthly payment drop to $238.

And a borrower earning $40,000 could see a monthly payment drop from the current $151 per month to as low as $30 per month!

As in the current programs, if you successfully make 20 years of these new lower payments, the balance will be forgiven. And for those who have loans initially totaling less than $12,000, and who make regular payments under this plan, the loan will be forgiven after 10 years of payments. For every $1,000 of initial additional borrowings, the time until forgiveness is extended by one year.

There are some other important features of the program:


swipe to next page



Scott Stantis Popeye Taylor Jones Poorly Drawn Lines Rose is Rose Tim Campbell