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Published: Jan 10, 2023 6 min read
Young college graduate holding diploma, wearing a cap and gown
Money; Getty Images

The Biden Administration is taking the next step toward introducing a more generous student loan repayment plan that could reduce payments for millions of borrowers.

The Education Department released more details about its proposed changes to income-driven student loan repayment plans on Tuesday. The changes — many of which had already been laid out by the administration — are designed to lower monthly payments for many borrowers and make a complicated program simpler and easier to access.

"We cannot return to the same broken system we had before the pandemic, when a million borrowers defaulted on their loans a year and snowballing interest left millions owing more than they initially borrowed,” U.S. Secretary of Education Miguel Cardona said in a news release on Tuesday.

Under the proposed changes, the Education Department estimates that future student loan borrowers will see their lifetime payments per dollar borrowed fall by 40% on average, with lower-income borrowers seeing their payments per dollar fall by 83% compared to the plan the department wants to update.