More than 4 million student loan borrowers, including more than 65,000 in Massachusetts, have signed up for a new repayment plan based on their incomes, the U.S. Department of Education has announced.
The Biden administration had announced the “income-driven repayment” plan on June 30, the same day the Supreme Court struck its move for a broad cancellation of student loans. The new plan is called Saving on a Valuable Education or SAVE.
Under its terms, as outlined by the Education Department and White House, a single borrower who makes less than about $15 an hour will not have to make any payments, and borrowers earning above that wage would save at least $1,000 a year. As long as they keep up with their payments, all enrollees will never see their balance grow due to unpaid interest.
Borrowers with relatively small balances, in the low five figures, could earn forgiveness after as few as ten years of making payments, compared to 20 to 25 years under other income-based plans, according to a White House fact sheet.
“Millions of borrowers are already benefitting from enrollment in the SAVE plan, and I’m thrilled to see so many Americans submitting applications every day so that they, too, can take advantage of the most affordable student loan repayment plan in history,” Education Secretary Miguel Cardona said in a department news release.
A table in the Sept. 5 release shows 66,700 residents of Massachusetts have signed up for the repayment plan. The biggest states by population had the most enrollees, with 345,000 in Texas and 331,600 in California, out of the 4 million total. The administration estimates 20 million borrowers could enroll.
Borrowers can sign up by visiting StudentAid.gov/SAVE. The application allows them to have their income accessed securely from the Internal Revenue Service, so they don’t have to reapply every year.
“The new application is easy and quick. Most people only need about 10 minutes to complete it,” said Federal Student Aid Chief Operating Officer Richard Cordray. “Borrowers can get their monthly payment calculated in real time.”
The department says it has directly contacted 43 million borrowers to inform them about the SAVE plan and its benefits. A partnership has been formed with civic organizations, including the NAACP and Urban League, to conduct additional outreach.
The department update on those efforts and enrollment so far comes as millions prepare to resume making payments after a pandemic-related moratorium has ended. Interest began accruing in September, with payments due next month.
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