Student-loan borrowers can now apply to lower their monthly payments with 'the most affordable repayment plan yet,' Biden's Education Department says

• Student-loan borrowers can apply for the new income-driven repayment plan's beta version.
• The new plan, known as the SAVE Plan, will fully launch in August.

Just over two months before federal student-loan payments resume, President Joe Biden's Education Department launched the first version of its new income-driven repayment plan.

CNN first reported on Sunday that the Federal Student Aid office launched a beta version of the updated IDR application that includes an option for borrowers to enroll in the new SAVE Plan, which the department calls "the most affordable repayment plan yet," per its website.

"During the testing period, eligible borrowers can apply for the SAVE Plan, but some website functionality may be limited as the Department's technical team monitors site performance and refines and tweaks the application as needed," a department spokesperson told Insider. "This testing period will allow the Department to monitor site performance through real-world use, test the site ahead of the official application launch, refine processes, and uncover any possible bugs prior to official launch."

According to Federal Student Aid, borrowers who are not currently on an IDR plan and want to lower their monthly payments should complete the new application, along with borrowers who are currently on a plan but need to recertify their income or make any other changes. Borrowers who complete an application during this testing period will not need to reapply, and they will receive a confirmation email after they have applied. The department also noted that the application may be "available on and off" during this testing period, so if it's not available at one point, the borrower should try again later.

Additionally, if borrowers are already enrolled in a REPAYE Plan, they will automatically be put on the new SAVE Plan and they will not need to reapply or request a change to their plan. Borrowers can learn more about whether they need to apply for new plan, and how to do it, at this link.

"When fully live, millions of borrowers will be able to complete the new application in ten minutes or less and will never have to reapply," a department spokesperson said. "The new IDR auto-recertification feature will prevent borrowers from the risk of missing their annual IDR recertification date, which has caused millions of borrowers each year to delay their time toward forgiveness and incur additional interest charges."

This beta period is in preparation for a full launch later in August, and it's standard practice for the launch of a new program to root out any errors or technical difficulties.

As Insider previously reported, the SAVE Plan would increase the income exemption from 150% above the poverty line to 225%, meaning that borrowers earning $32,800 or less or a family of four earning $67,500 or less will not owe student-loan payments. It would also eliminate remaining interest on balances if a borrower makes their monthly payments and does not require a spouse to cosign the application.

These reforms come as the Education Department is preparing to restart student-loan payments in October — with interest beginning to accrue again in September — after an over three-year pause. To help ease the transition back into repayment, the department also announced as 12-month "on-ramp" period once payments resume, during which borrowers who miss payments will not be reported to credit agencies. However, interest will still accrue during this period.

The department is also in the process of developing a new broad student-debt relief plan after the Supreme Court struck down Biden's first plan to up to $20,000 in student debt for federal borrowers. Since that process could take time, the department recommends borrowers look into the SAVE Plan should they find they cannot afford payments without broad relief.

"This new plan is a critical step in delivering on President Biden's commitment to supporting students and borrowers, and helping more American families get out from under the burden of student loan debt," the department spokesperson said. "No President has fought harder for student borrowers, and the SAVE plan will give millions of borrowers breathing room on their monthly bills now and for years to come."