• Home
  • News
  • Personal Finance
    • Savings
    • Banking
    • Mortgage
    • Retirement
    • Taxes
    • Wealth
  • Make Money
  • Budgeting
  • Burrow
  • Investing
  • Credit Cards
  • Loans

Subscribe to Updates

Get the latest finance news and updates directly to your inbox.

Top News

Why Your Company Needs Flexible Capital (and How to Get It)

July 6, 2025

101 Small Business Ideas to Match Your Personality, Investment, Skills & Goals

July 6, 2025

Microsoft Office Pro 2021 Gives Your Team the Edge at a One-Time $40 Cost

July 6, 2025
Facebook Twitter Instagram
Trending
  • Why Your Company Needs Flexible Capital (and How to Get It)
  • 101 Small Business Ideas to Match Your Personality, Investment, Skills & Goals
  • Microsoft Office Pro 2021 Gives Your Team the Edge at a One-Time $40 Cost
  • Create Visuals, Content, and Presentations That Land with This $25 Bundle
  • Big Beautiful Bill Affects Many Tax Rules Including Estate Planning
  • Can the Self-Cleaning Feature Damage Your Oven?
  • The 15 Best-Paying Big Cities for Construction Workers in America
  • Final Hours to Get Windows 11 Pro with Copilot for Just $10
Monday, July 7
Facebook Twitter Instagram
FintechoPro
Subscribe For Alerts
  • Home
  • News
  • Personal Finance
    • Savings
    • Banking
    • Mortgage
    • Retirement
    • Taxes
    • Wealth
  • Make Money
  • Budgeting
  • Burrow
  • Investing
  • Credit Cards
  • Loans
FintechoPro
Home » Biden’s income-driven repayment plan comes with a $475 billion price tag, report says
Loans

Biden’s income-driven repayment plan comes with a $475 billion price tag, report says

News RoomBy News RoomAugust 5, 20230 Views0
Facebook Twitter Pinterest LinkedIn WhatsApp Reddit Email Tumblr Telegram

The price tag on President Joe Biden’s new income-driven repayment plan will cost more than was previously estimated, according to a recent analysis.

Biden’s Saving on a Valuable Education (SAVE) plan could lower borrowers’ monthly payments to zero dollars, reduce monthly payments in half and save those who make payments of at least $1,000 a year, the White House said in a statement. 

This new IDR plan will reduce federal student loan repayment for many borrowers, including borrowers in existing IDR plans and borrowers using the standard repayment option.

Writing off the loans could cost $475 billion over the next 10 years, according to the University of Pennsylvania’s Penn Wharton budget model. 

A previous analysis by Penn Wharton had estimated the cost would come in at between $333 billion and $361 billion over 10 years. The Congressional Budget Office (CBO) estimated in March that the “new income-driven repayment plan would increase the government’s costs for federal student loans originated through 2033 by $230 billion.” However, those calculations were made before Biden announced the new SAVE plan.

Roughly $200 billion will be applied to payment reductions from the $1.64 trillion in outstanding loans in 2023, according to the analysis. The remaining $275 billion will go toward the $1.03 trillion outstanding loans expected over the next 10 years.

“We estimate a take-up rate for future loans of 70%, implying that about $645 billion in future loans will be subsidized,” Penn Wharton said. “About 6.57% of future borrowers (or 4.98% of total predicted loan volume) will never have to make any payments under SAVE.”

If you hold private student loans, you could lower your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered.

MAJORITY OF HOMEBUYERS SAY THEY HAVE REGRETS: SURVEY

The new plan may incentivize more borrowing

Another fallout from the updated income-driven repayment plan is that student borrowers could be incentivized to take on more debt, according to the Penn Wharton analysis. 

“Due to the increased generosity of the newly proposed IDR plan, future student borrowers have the incentive to increase their federal student loan borrowing, shifting the current college financing pattern towards more loan borrowing instead of paying out-of-pocket,” Penn Wharton said.   

Undergraduate students could borrow between $5,500 to $12,500 each year in Direct Subsidized Loans and Direct Unsubsidized Loans, depending on their year in school and dependency status. Graduate or professional students could borrow up to $20,500 each year in Direct Unsubsidized Loans. Direct PLUS Loans can also be used for the remainder of the college costs.

If you want to pay down your private student loan debt, a refinance could help you lower your interest rate and monthly payment. To see if this is the right option for you, contact Credible to speak to a student loan experts and get your questions answered.

COST IS THE BIGGEST FACTOR BEHIND WHY A MAJORITY OF AMERICANS DELAY MEDICAL CARE: SURVEY

Parents put paying for their child’s college first

Most parents (78%) of college-aged kids put paying for college as their top financial priority, a recent College Ave survey said. Additionally, most parents said funding a college degree is more important than building savings, investing and retirement.

Moreover, 66% are using their savings and income as the top method to pay for college – an increase of 7% over 2022, according to the survey. More than half (55%) of these parents plan to use anywhere from $5,000 to $30,000 from their savings or income.

“For college-bound families, adding in the cost of college to a household budget – especially when some of those costs may be unknown – can be confusing if not stressful,” College Ave Student Loans Cofounder and CEO Joe DePaulo said. “Despite the many financial priorities parents are juggling for college as well as everyday expenses and goals, our survey finds parents are deeply committed to investing in their child’s education and future.”

Borrowers with private student loans could still find relief by refinancing to lower their monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.

MOST SENIORS REGRET RETIREMENT PLANNING DECISIONS, WANT DO-OVER: SURVEY

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Read the full article here

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

Related Articles

Student loan delinquencies tank credit scores for millions of borrowers: How to recover

Loans May 19, 2025

Student loan delinquencies surge, sending credit scores plunging for borrowers

Loans May 15, 2025

Student loan borrowers in default begin facing debt collections

Loans May 5, 2025

Here’s why the average US credit score is falling

Loans April 18, 2025

Married Americans with student loans with income-driven plans may get a break: report

Loans April 17, 2025

Late car payments rise to highest level in over 30 years

Loans March 10, 2025
Add A Comment

Leave A Reply Cancel Reply

Demo
Top News

101 Small Business Ideas to Match Your Personality, Investment, Skills & Goals

July 6, 20250 Views

Microsoft Office Pro 2021 Gives Your Team the Edge at a One-Time $40 Cost

July 6, 20250 Views

Create Visuals, Content, and Presentations That Land with This $25 Bundle

July 6, 20250 Views

Big Beautiful Bill Affects Many Tax Rules Including Estate Planning

July 6, 20250 Views
Don't Miss

Can the Self-Cleaning Feature Damage Your Oven?

By News RoomJuly 6, 2025

ASDF_MEDIA / Shutterstock.comSelf-cleaning ovens are a wonder of modern technology. Rather than scrubbing away at…

The 15 Best-Paying Big Cities for Construction Workers in America

July 6, 2025

Final Hours to Get Windows 11 Pro with Copilot for Just $10

July 5, 2025

How to Deal With Negative Articles on Google

July 5, 2025
Facebook Twitter Instagram Pinterest Dribbble
  • Privacy Policy
  • Terms of use
  • Press Release
  • Advertise
  • Contact
© 2025 FintechoPro. All Rights Reserved.

Type above and press Enter to search. Press Esc to cancel.