Biden's SAVE Plan: What Does it Mean For Student Borrowers?

President Biden's newly introduced SAVE plan is aimed at reducing payments for millions of student borrowers. Notably, the SAVE plan protects a larger percentage of the borrower's income. The threshold amount is raised from 150% above the federal poverty guidelines to protect up to 225% of the borrower's income that exceeds that level. The program will reduce payments, but it will also stop monthly interest in certain cases. Under current law, if a borrower's payment does not cover their interest expense, that interest amount is added to the loan's principal balance. Under the new plan, any accrued and unpaid interest is waived permanently. Essentially, these interest amounts are forgiven rather than added to the balance of the loan. For more information on the new retirement plan student loan matching rules created by the SECURE Act 2.0, visit Tax Facts Online. : Q .