Student loan borrowers should keep an eye on their bills in the coming months as the Biden administration moves forward with student loan relief initiatives.
After the Supreme Court blocked Biden’s initial forgiveness program in 2023, the administration has continued to implement a series of programs to help some of the 43.2 million borrowers struggling with the nation’s $1.6 trillion federal student debt.
Earlier this year, changes were made to the Saving on a Valuable Education (SAVE) income-driven repayment plan, giving borrowers who had originally taken out $12,000 or less the opportunity to completely forgive the loans after ten years of payments.
Earlier this month, the government also announced an additional $7.7 billion in forgiveness for student loan holders, a precursor to another cut that will take place in July.
Do you have trouble keeping track of all the changes and programs? Here’s what you need to know.
Biden admin announces $7.7 billion in student loan debt relief
On Wednesday, the Biden administration announced that an additional $7.7 billion in loan debt relief had been approved for 160,500 borrowers. This will bring the total amount of debt forgiveness to $167 billion for 4.75 million student loan borrowers, or 1 in 10 debt holders, according to the Department of Education.
Additionally, the administration is working to expand and contact eligible borrowers to get a SAVE plan, which currently has 7.7 million borrowers enrolled, 4.3 million of whom have $0 payments, according to the Department of Education .
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Who is eligible for the new $7.7 billion debt relief?
Student loan relief covers debts for three categories of borrowers:
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$5.1 billion: 66,900 borrowers receiving Public Service Loan Forgiveness (PSLF), which helps people who work in the public sector or in nonprofit organizations, will receive relief.
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$613 million: 54,3000 borrowers enrolled in President Biden’s SAVE plan and have smaller loans for post-secondary education. Borrowers can get relief after at least 10 years of payments if they originally borrowed $12,000 or less.
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$1.9 million: 39,300 borrowers will receive forgiveness for income-driven repayments (IDR) as a result of solutions aimed at addressing concerns about loan servicers’ abuse of forbearance.
Some student loan payments will be cut in half in July
Student loan borrowers will have an extra chance to get some relief in July, when changes take effect in the percentage you’ll have to pay each month based on your income.
Currently, those with a SAVE plan pay 10% of their discretionary income monthly. Discretionary income is calculated by finding the difference between adjusted gross income and an income that is 225% of the federal poverty level.
According to the Department of Health and Human Services, the federal poverty level is estimated at $15,060 per year for one person in 2024. That means 225% of the federal poverty level for a single-person household is $33,885. To find the discretionary income for a single-person household, simply subtract that amount from the adjusted gross annual income. The difference between the two is the number you are looking for.
For example, a single-person household with an annual gross income of $50,000 before taxes would have a discretionary income of $16,115. Ten percent of that would be about $1,611, which, divided by 12, would mean the monthly payment through a SAVE plan would be about $134.
In July, however, that monthly percentage will be reduced to 5%, cutting monthly payments in half for many. In the example above, the borrower would owe approximately $67 per month.
These changes apply to borrowers with student loan debt enrolled in a SAVE plan. People with both undergraduate and graduate school loans receive payments of 5% to 10%, calculated based on the original loan balances. Those with only graduate loans will still receive a benefit of 10% of their discretionary income.
How do you know if you qualify for forgiveness or relief?
The Biden administration has said people eligible for some of the $7.7 billion in aid will be notified via email. It will then take a few weeks before the actual balance and account changes appear.
Those wondering if they will see a change in their bill in July can log into their SAVE Plan account to check their status and eligibility.
How to sign up for SAVE
You can register for a SAVE Plan online at studentaid.gov/idr.
SAVE plans are income-driven repayment (IDR) plans where monthly payments are determined by the borrower’s income and family size. These plans are often cheaper than standard options, which don’t necessarily take into account your income and ability to pay.
SAVE plans have additional benefits, such as eliminating 100% of the remaining monthly interest on both subsidized and unsubsidized loans after you make a full scheduled payment, keeping your outstanding balance from growing due to escalating interest rates.
SAVE also gives borrowers the option to exclude spousal income for those who are married but file taxes separately. This way, monthly payments can be determined solely based on your personal outcome and spouses do not have to co-sign IDR applications.
Who is eligible for SAVE?
Several parameters determine eligibility for a SAVE plan, most of which are described on the studentaid.gov website.
In general, however, the SAVE plan is available to federal student borrowers with direct student loans. It is not available for private loans or Parent PLUS loans unless the Parent PLUS loans have already been consolidated. Applicants must also be in good standing with service providers.
Federal loans that generally qualify for a SAVE Plan include:
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Direct subsidized loans
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Direct, unsubsidized loans
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Direct PLUS Loans provided to graduate or professional students
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Direct consolidation loans where no PLUS loans have been repaid to parents
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Consolidates loans from the Federal Family Education Loan (FFEL) programs, including Federal Perkins Loans, Federal Stafford Loans, FFEL Plus Loans, and FFEL Consolidation Loans.
This article originally appeared on USA TODAY: Who will get student loan forgiveness: Another $7 billion good this month
