The Biden administration announced a major overhaul of federal student loan repayment options on Tuesday, looking to ease the debt burden for millions of borrowers. The new income-driven plan aims to make monthly payments more manageable and limit how much interest can accrue on unpaid balances.
Under the revised program, the Education Department projects that the typical undergraduate loan recipient will save around $1,000 per year. Meanwhile, the average graduate borrower could save about $2,000 annually based on a standard loan debt load.
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White House highlighted the relief that comes with the changes
The White House touted the changes as providing meaningful relief with the potential to cut total lifetime payments in half for many borrowers. The plan specifically targets greater affordability for black, Hispanic, Native American, and Alaska Native students.
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The White House said in a statement, “We are continuing to pursue an alternative path to deliver student debt relief to as many Americans as possible as quickly as possible.”
The income-driven repayment changes reflect the Biden Administration’s push to ease pressures on student loan users through executive action. For now, the Biden plan provides progress on affordability goals for student debt holders.