What you need to know about the new student loan relief plan

Just as student loan repayments are set to resume in October, the White House has rolled out a new initiative aimed at helping low-income borrowers, titled the Saving on a Valuable Education (SAVE) plan. The launch of the program comes one month after the Supreme Court struck down President Biden’s student debt forgiveness plan.

Video Transcript

- If you thought your hopes of ever seeing your student loans forgiven were over, think again. The Biden administration has quickly rolled out a new website just one month after the Supreme Court struck down his student loan forgiveness plan. The new Saving on a Valuable Education plan essentially expands options for low-income borrowers by cutting monthly payments and making sure interest on those loans stop growing as long as the required payments are met.

The biggest change is that the SAVE plan only requires borrowers to pay 5% of their discretionary income compared to 10% under the current plan. And some borrowers could even see their entire student debt forgiven if they've made the equivalent of 10 years of payments and their balance is $12,000 or less. The program technically doesn't go into effect until July 2024. But a beta website is already available.

The Department of Education says those who apply this summer could see changes to their bill before student loan repayments resume in October. And if you're already enrolled in the existing REPAYE program, you'll automatically be switched to the new plan.