Biden Administration Officially Launches New Income-Based Student Loan Repayment Plan

President Joe Biden’s administration on Tuesday officially launched a new income-based student loan repayment program, a move that comes as payments are set to resume in October.

The program, which the White House first announced in August of last year, is central to Biden’s efforts to provide student debt relief now that the Supreme Court has struck down his plan to cancel up to $20,000 from loan balances. The Education Department has been beta testing online enrollment for weeks but now the program is officially open for enrollment at StudentAid.gov/SAVE.

“It’s the most affordable student loan plan ever,” Biden said in a video announcing the launch. “As long as I'm president, my administration will never stop fighting to deliver relief to borrowers and bring the promise of college to more Americans, and that's a commitment.”

Under the Saving on A Valuable Education (SAVE) plan, borrowers’ monthly payments can be reduced from 10% of their discretionary income to 5%. Additionally, any accrued interest not covered by the monthly payment will be waived.

And since payments in the plan are based on discretionary income – defined under the plan as the difference between an individual’s annual income and 225% of the poverty guidelines – some borrowers’ payments will be even further reduced. For example, a borrower who earns roughly $15 an hour would not be required to make any monthly payments under the plan, according to the White House.

“This plan is a game changer for millions of Americans, many of whom are putting off having children, buying their first home or even starting a business because they can't get out from under their student loans,” White House Domestic Policy Advisor Neera Tanden said in a press call Monday. “Student loans will be manageable.”

The SAVE program is expected to cost more than if the Biden administration was allowed to go through its original student loan forgiveness plan. The University of Pennsylvania’s Wharton School in July put the price tag of the new income-driven repayment plan at $475 billion over the next 10 years. By comparison, the Congressional Budget Office projected Biden’s cancellation plan would have cost $315 billion over the same time frame. 

The Department of Education is also partnering with several grassroots organizations for an outreach campaign to promote the SAVE plan. The department will be working with Civic Nation, the National Association for the Advancement of Colored People (NAACP), the National Urban League (NUL), Rise, the Student Debt Crisis Center, UnidosUS, and Young Invincibles.

The Education Department will also directly contact nearly 30 million borrowers to invite them to apply for the SAVE plan.

Education Secretary Miguel Cardona said the new partnership will “maximize our own communication and outreach and help enroll as many borrowers as possible.”

“With the SAVE plan, we're making a promise to every student … and every student who borrowed a federal loan to pay for college: Your payments will be affordable. You're not going to be buried under a mountain of interest. And you won't be saddled with a lifetime of debt,” Cardona said in a press call.