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Student loan payment pause may be in jeopardy
Many people hoped the Biden Administration's student debt forgiveness plan would be a sure thing, but the decision is on hold now and you should begin to prepare to pay that debt back.
ATLANTA - If you have student loan debt, prepare to begin to repay that. Many had hoped the Biden Administration’s student loan debt forgiveness plan would be a sure thing, but the there has been push back from conservative quarters, and the US Supreme Court is set to hear the case.
While federal loan recipients wait, a new repayment plan is brewing. It's an update to the current Income Driven Repayment Program proposed by the US Dept. of Education. REPAYE calculates repayment based on your earnings, not your loan amount.
You would be required to repay 5 percent of your discretionary monthly income. Currently, that’s 10 percent, so it cuts the bill in half. Repayment kicks in when you make, for your family size, 225 percent above the poverty level. That's a change from 150 percent.
Student loan borrowers gather near The White House to tell President Biden to cancel student debt on May 12, 2020 in Washington, DC. (Photo by Paul Morigi/Getty Images for We, The 45 Million)
And this is what that will look like. If your adjusted gross income, AGI, is $65,000 a year, and it’s just you, no spouse or kids, the current REPAYE program has you paying $390 toward your federal student loan every month. Under the revised program, that’s $145. A single borrower who makes less than $30,500 would repay nothing, and no repayment if you are a family of four and make less than $62,400.
So, there is a holding pattern on debt forgiveness. Plan on repaying something back this summer. Just re-adjust your budgets. And keep an eye on the revised REPAYE program which would reduce your payments.
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