As a student loan borrower, the burden of repaying your debt can be overwhelming. With the recent announcement from the Biden administration, there is hope for those struggling to repay their loans. The new plan aimed to make it easier for borrowers to eliminate their debt through income driven repayment plans, a key step in overhauling the $1.6 trillion federal student loan program that has left many with ballooning student loan debts.
Student loan income driven repayment plans were designed to help lower earners afford college, but many have had difficulty using them due to technical problems and onerous paperwork requirements. If the new Biden plan is implemented, the proposed changes would provide borrowers with more options with generous forgiveness plans and more opportunities to shrink their debts that could help them become debt-free sooner while paying only a fraction of their total loan balances. This would be a welcome change for those who have been struggling to make ends meet while trying to repay their student loans.
One important aspect of the new Biden plan is that the administration plans to reduce the amount of discretionary income borrowers must pay each month on their undergraduate loans from 10% to 5% if they are enrolled in an income driven repayment plan. This will help to prevent student debt balances from growing in the future. Additionally, borrowers with income is below 225% of the federal poverty line will not have to make monthly payments on their loans . This corresponds to an individual income of less than roughly $30,600 per year. It’s important to keep in mind that this is still a proposed rule, and it will go through a 30 day public comment before the department can release a final rule. However, the fact that the Biden administration is taking steps to address the issue of student loan debt as a positive sign for borrowers, who have been struggling to repay their loans.
Furthermore, the proposal included a provision that would forgive loan balances for people enrolled in income based plans after 10 years of payments For borrowers whose original loan balances were $12,000 or less. This will have an impact on making some degree granting programs, especially at community colleges, effectively free, making it more accessible for many more students.
In any case, it’s important to stay informed about the status of this proposed rule, and to review your options when it comes to repaying your student loans. Remember, you are not alone in this, and there are resources available to help you navigate the process. Don’t hesitate to reach out to The Dellutri Law Group if your student loans have become completely unmanageable, or if you have fallen behind and defaulted on your payments.
There are new developments every day. Bankruptcy may be an option for you to consolidate your student loan debt and your other debts. Right now, the Department of Education is working closely on a new proposal to help borrowers go through the bankruptcy process and eliminate all or a substantial portion of their student loan debt. This is important for individuals who have very high student loan balances. The proposed Biden plan doesn’t really address individuals with very high balances on their student loan debts.
If you are thinking about filing bankruptcy to handle your student loan payments, please consider calling The Dellutri Law Group for a complimentary strategy session to find out exactly how bankruptcy can assist with your student loans. You may be very surprised how much a consumer bankruptcy case can help you get a fresh start and move forward to a brighter financial future.