October 21, 2023
Who could benefit the most from Biden’s latest attempt at student loan forgiveness?
Undergraduates at public two-year colleges might be in the best position – if the administration’s new policy holding predatory colleges more accountable goes as planned, that is.
And borrowers who earn certificates, rather than four-year degrees, using the new income-driven repayment plan will have to pay back only about a third, on average, of what they borrowed.
Those findings were laid out in a research analysis published this week by the Urban Institute, a social and economic policy think tank. The report uses data from the College Scorecard, an online Education Department tool that lets consumers compare colleges, to determine what loan repayment might look like under the policy revision dubbed by the administration “Saving on A Valuable Education,” or SAVE. The system bases monthly loan repayments on borrowers’ incomes and family sizes, according to the Education Department, lowering payments for almost everyone who participates.
Income-driven repayment is not a new concept, but Education Secretary Miguel Cardona has referred to the newest iteration of the program as the “most affordable repayment plan ever.” For some borrowers, it will reduce monthly payments to $0. More than 4 million borrowers have already enrolled, and it will be fully available to all federal student-loan borrowers starting July 1, 2024.