INDIANAPOLIS — Big changes could be coming to your monthly federal student loan payment.
It's part of President Joe Biden's plan to provide relief for student borrowers. When he announced the plan in August 2022, the possible one-time cancellation stole the show.
Now, new details are out about the portion proposing updates to income-driven repayment plans. The plans, created in the 1990s, are intended to protect borrowers from financial hardship.
They take how much you make each year, factor in your household size and calculate your monthly payment.
Department of Education chief economist Jordan Matsudaira said now they want to update this program, specifically the REPAYE plan.
"The idea was to provide borrowers with a little bit of breathing room," Matsudaira said.
The proposal, he said, would cut payments for people with undergraduate loans by more than half. But it keeps the end goal of loan forgiveness.
The White House said a single schoolteacher making $44,000 a year would pay $56 a month on their loans instead of $197 under the proposal.
After borrowers have made monthly payments for the required set term, the loan should be forgiven.
If the person earns less than around $30,000 a year, no payments are required.
"If they never make more than $30,000, then they won't make repayments," Matsudaira said.
Borrowers could see the new plan implemented later this year.
Matsudaira added that he does not see this proposal facing the same obstacles as cancellation.
"This is part of a normal regulatory process," he said. "We expect to take comment on the rule, and then improve the rule based on the comments that we get back from the public."