President Biden announced details on his new plan. This is what you need to know about it.
Biden's new student loan forgiveness plan is not actually new.It is a number of revisions to revised pay as you earn (REPAYE).
The Big Student Loan Plan Change
PAYE will no longer be an option. This means if you borrowed between 2007 & 2014, you have a big decision to make. Do you go on PAYE or use new REPAYE?
What To Do?
It depends because everyone's situation is different.However, if you borrowed between 2007 - 2014 you'll have to decide by July.
If you owe less than $10k then forgiveness will only be 10 years. For every $1k owed another year will be added with a max of 25 years.
Plan Change #2
Undergrads only pay 5% of income. Grad students will pay a blended rate between 5% and 10%. Effect: Your monthly payment will be lower.
Plan Change #3
The poverty line adjustment increases from 150% to 225%.Effect: Your monthly payment will be lower.
Plan Change #4
REPAYE subsidized interest increases from 50% to 100%.Therefore, your loans balance won't increaseEffect: Lower tax bill in 25 years when your loans are forgiven.
Plan Change #5
If you file your taxes separately when you are married, your monthly payment will now only be based on your income.Effect: Potentially a lower monthly payment.
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