A new proposal from the Biden administration would lower federal student loan payments for some Americans – and pause payments completely for anyone making less than $30,600 a year.
“Today, we’re making a new promise to today’s borrowers and for generations to come: Your student loan payments will be affordable,” Secretary of Education Miguel Cardona said in a call with reporters Monday evening. “You won’t be buried under an avalanche of student interest, and you won’t be saddled with a lifetime of debt.”
By making changes to existing income-driven loan repayment plans, the administration hopes to “transform college financing and reduce future borrowers’ total payments per dollar by $0.40, while targeting that help on low- and middle-income borrowers,” Deputy Secretary James Kvaal told reporters. The plan would create a “true student loan safety net,” he said.
Biden first committed to reforming the income-driven repayment plan program when he announced his student loan relief plan – which is tied up in the courts – in August. The Department of Education says this announcement “delivers on President Biden’s commitment to fix the student loan repayment system” and is a “key step in the Biden-Harris Administration’s broader effort to make higher education more affordable.”
One proposed change would raise the threshold for repayments. Single borrowers making less than $30,600 per year would not need to make any payments under the proposal, up from the current $24,000 threshold. The figure is based on the poverty line, Kvaal said.