Biden Student Loan Cancellation Update: Borrowers Now Able to Apply

President Joe Biden's student debt plan has officially launched.

Beginning on Tuesday, student loan borrowers can begin enrolling in Biden's Saving on a Valuable Education (SAVE) repayment plan, which the administration is billing as "the most affordable student loan plan ever."

Estimated to benefit over 20 million borrowers, the new income-driven repayment program is expected to help participating borrowers cut their payments in half, with some having their balances zeroed out entirely.

The launch of the SAVE plan comes just weeks before millions of Americans are set to receive a loan bill for the first time in more than three years. Since the beginning of the pandemic, student loan payments have been on pause, but the moratorium is set to expire at the end of August. Interest will also start accruing again in September. The first due date will come in October.

Under the SAVE plan, the discretionary income cap will be reduced from 10 percent to five percent, so that borrowers won't have to put as much of their available income towards their outstanding loans.

"That's going to save the typical borrower around $1,000 a year. It's going to give borrowers a little bit more breathing room," Biden said in a video released by the White House on Tuesday.

Those monthly payments could even be reduced to $0 for borrowers with incomes less than $30,000. Because the plan is based on income and not student loan balance, monthly payments will remain at $0 until a low-income borrower begins making above $30,000, and that balance will not grow since interest accrual will be capped by the SAVE plan.

Read more: Student Loan Forgiveness Updates and FAQs: Who Qualifies and How To Apply

Borrowers who participated in the previous iteration of the SAVE plan, the Revised Pay As You Earn (REPAYE) plan, will automatically be enrolled in the new one.

Those who are looking to sign up can submit an application at StudentAid.gov/SAVE. The application takes roughly 10 minutes or less to complete and the approval process is expected to take a few weeks. While waiting, applicants can track the status of their applications online.

In order to apply, an applicant needs to provide their verified Federal Student Aid ID, their financial information from tax returns, their permanent and mailing address, telephone number and e-mail. Married applicants will also need to provide their spouse's financial information for IDR plan calculations, as their income could help further lower payments.

Biden's new plan comes in the wake of the Supreme Court's June ruling, which blocked the president's plan to cancel $10,000 in student loans for millions of borrowers and $20,000 for Pell Grant recipients.

Administration officials say Biden had the legal authority to implement the SAVE plan because Congress gave the Department of Education the power to define the terms of income-driven repayment plans like the one launched on Tuesday.

So far, the Biden administration has canceled more than $116 billion in student loans for 3.4 million Americans, the Education Department said.

"As long as I am president my Administration will never stop fighting to deliver relief to borrowers and bring the promise of college to more Americans. And that's a commitment," Biden said Tuesday.