Millions of Americans could be impacted as the Department of Education is proposing lower student loan payments

GREENVILLE, N.C. (WITN) – The new changes to the student loan repayment plan, otherwise known as the Revised Pay As You Earn repayment plan is just 1 of 4 types of income-driven repayment plans. The proposal will be in public comment for the next 30 days.

College students say it can be expensive to get an education. ECU student, Griffin Purvis says, “I’m paying $9,000 just to go to class and then they expect me to pay $500.00 for textbooks, and it’s $5.00 to park in the garage just for the hour to go to class. They just pile these fees on you, it’s hard to get going in life.”

For those who rely on loans to help with the expenses, the Department of Education announced a proposed update to the income-driven repayment program to make student loan payments more manageable for borrowers.

“Student loan debt has been a growing, growing problem that I’ve seen in my 15 years in financial aid, and having something like this proposal where it would decrease student loans to $0 or it would decrease by at least 50% per month– is going to have a massive benefit in all students across the nation and all student loan borrowers,” says Pitt Community College Financial Aid Director, Lee Bray.

Borrowers making less than $30,600 a year would qualify for the $0 monthly payments. However, the proposal does not apply to Parent-PLUS loan borrowers.

The proposal will stop the charge of any monthly interest that is not covered by the borrower’s payment, meaning a borrower’s balance will not increase if they are making their monthly payment.

Along with the new repayment plan, the Biden Administration also announced in August that millions of Americans would be eligible for the cancellation of their education debt but since then has been challenged in court and is currently on pause.

“I’m very confident that that will go through, as soon as the legislation is weeded out but that would be extremely beneficial once that does go through and thankfully the administration, even though it’s held up in the court– they extended the repayment date of everyone on their student loans,” Bray says.

Although the federal student loan debt relief is at a halt– the new repayment plan could save a typical 4-year graduate around $2,000 a year.

According to the Department of Education, the most affordable income-driven repayment plan requires borrowers to pay 10% of their discretionary income each month to their student debt. the new repayment plan would lower the discretionary income amount to 5%.

Facebook