Plan B in progress after Biden-Harris Debt Relief Plan hits legal obstacles 

The Biden-Harris Debt Relief Plan was introduced on Aug. 24, 2022 as a way to financially relieve students of up to $20,000 in student loan debt. To help students deal with their loans while the debt relief plan is paused, the current presidential administration has started adjusting one of their programs. 

The original debt relief plan has been put on pause following an onslaught of legal troubles, but the Biden-Harris Administration has proposed an amendment to the REPAYE plan that could affect up to 40 million Americans. 

What does REPAYE mean? 

The REPAYE plan stands for the Revised Pay As You Earn plan. This program seeks to alleviate some of the monthly payments that students will have to make once loan payment begins again.  

According to an article from NPR, President Biden has said that he is “confident that our student debt relief plan is legal” and that The Secretary of Education is extending the pause on student loan payments while they seek relief from the courts. 

Who is eligible to receive debt relief? 

Households who earn $25,000 annually will have to pay 10% of their discretionary income monthly toward their student loans under the current REPAYE plan. According to CNBC, the updated REPAYE plan will lower this amount to 5% for households that earn over $30,500 annually.  

Additionally, any single borrowers who earn less than $30,500 or families that earn less than $62,400 annually will have their monthly loan payments reduced to $0. Joe Craig, the department chair for economics at UCCS, said that “more than half of the students [at UCCS] could be affected.” 

What do the updates to the REPAYE plan mean for eligible individuals? 

According to CNBC, the updated REPAYE plan also eliminates any additional interest that would apply to individuals’ debt after a monthly payment. This includes those who pay $0 monthly.  

This plan will create an easier path to loan forgiveness. People can expect to have their loans paid off after around 20-25 years, and the amount that they pay will be less than they would have to pay under the current plans. 

What do these legal obstacles mean for REPAYE? 

Craig said that the legal obstacles that the current Biden-Harris Debt Relief Plan is facing will likely pass. He believes that the Supreme Court will not block the current Biden-Harris Debt Relief Plan, and that it is just being placed on hold for the time being.  

How do these updates to REPAYE affect enrollment? 

The updated REPAYE is enrollment-based, so most borrowers will have to take it upon themselves to ensure that they are covered. There will be exceptions made for borrowers who are 75 days behind their payments as they are deemed at-risk and will be enrolled in the program automatically. 

People who are currently enrolled in the program can expect to see their loans reduced in the near future as the updates to the program are gradually rolled out. 

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