(NewsReady.com) – After the Supreme Court determined President Joe Biden’s student loan forgiveness plan was unconstitutional, he rolled out the Saving on a Valuable Education (SAVE) plan. The new approach is an income-driven repayment (IDR) plan that can reduce a borrower’s payments to zero, cut them in half, or save them at least $1,000 per year if they make their payments. Others will see their loans forgiven. A financial expert is issuing a warning about the plan.
On July 19, Jade Warshaw, a co-host of “The Ramsey Show,” appeared on Fox Business’ “Mornings with Maria” to discuss the SAVE plan. She claims the administration is “pulling the wool over people’s eyes” because they think their loans will be forgiven, but she claims the administration hasn’t explained “how many years it takes to actually get this forgiveness.”
Warshaw stated the average borrower owes approximately $30,000 in student loans. She said they will have to pay their debt for 30 years before theirs are forgiven because you will have to pay for 10 years to see $12,000 forgiven. “And then for every additional thousand, you pay another year.”
According to the White House Fact Sheet released when the president announced the plan, the Department of Education would start forgiving loans after 10 years of payments for those with original balances of $12,000 or less. Currently, that forgiveness begins at 20 years.
Some Americans won’t see their loans forgiven, but they also won’t be required to make payments. The administration is raising the income threshold that the Department of Education considers non-discretionary from 150% of the federal poverty level to 225% of the federal poverty level. That means anyone who earns less than $32,805 annually ($67,500 for a family of four) would have a monthly repayment of $0.
Warshaw told the Fox Business audience that people need to pay their debt back if they signed up for it and encouraged Americans to rework their budgets to do so.
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