Student Loan Borrowers Can Begin Applying For Lower Payments

By Scripps News
Posted on 08/01/23 | News Source: WMAR2NEWS

As federal student loan borrowers prepare for repayments to begin after a three-and-a-half-year hiatus, the federal government has launched a websitefor borrowers to begin applying for income-driven repayment plans. 

Interest on student loan payments begins in September with payments expected to resume in October, but many might find their payments to be lower than prior to the pandemic.

The website was scheduled to launch Aug. 1, but was up a day early. The website automatically imports income information from the Internal Revenue Service. A Scripps News reporter was able to import all of the needed information within five minutes. Those who apply for income-driven repayment plans will need to have their income re-certified yearly. 

The Department of Education is encouraging borrowers who might struggle with payments to explore its new income-driven repayment plans. 

The White House has touted the new plans as a response to its failed attempt to forgive up to $20,000 in student loan debt among low and middle-income borrowers. 

The newest income-driven repayment plan implemented by the Biden administration means most borrowers will have lower monthly payments than before the pandemic.

Previously, borrowers using income-driven repayment plans on undergraduate loans were expected to pay 10% of their discretionary income. Discretionary income was previously considered any dollar made above 150% of the poverty level.

Now, borrowers with only undergraduate loans will be expected to pay 5% of their discretionary income. The amount considered discretionary income increased to 225% of the federal poverty level.