Student loan bills may soon see 'a dramatic drop,' expert says. Here's what to know about the change

A feature of the Biden administration's new income-driven repayment plan that will reduce millions of borrowers monthly payments kicks in on July 1.

Here's why: A feature of the Biden administration's latest income-driven repayment plan that will reduce millions of borrowers' monthly payments kicks in onUnder IDR plans, borrowers pay a share of their discretionary income each month and receive forgiveness after a set period, typically 20 years or 25 years. SAVE replaced the U.S. Department of Education's former REPAYE option, or Revised Pay As You Earn plan.

But the most generous provision of the program that will soon go into effect slashes the share of discretionary income borrowers have to pay toward their undergraduate student debt each month to 5% from 10%. A person making roughly $50,000 a year with a previous student loan payment under REPAYE of around $228 will now have a monthly bill of $67, according to a calculation from Kantrowitz.

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