BEAUMONT, Texas — Student loan borrowers still have hope for paying back their debt.
Texans owe an average of $33,000 in student debt, the second highest in the country, according to StudentDebt.org.
The U.S. Department of Education is updating their current student loan repayment plan.
The new plan will help borrowers pay off their debt quicker, while also putting money back into the economy.
"I think it's such a great idea because it's just one of the biggest obstacles of students finishing an education at a higher institution, is the cost. And like the loans you take out, and the interest rates that pile up," said Texas A&M Biomedical Science Junior, Lauren Maglalang.
The old payment plan leaves borrowers with a lot of interest that takes decades to pay back.
The updated plan is called the Saving on Valuable Education (SAVE) plan and will help borrowers become debt free faster.
The plan would eliminate compound interest rates on student loans for undergraduate and graduate students. It could make paying off the debt month by month more affordable.
Right now, student loans are calculated based off disposable income.
In the SAVE plan, disposable income would be reformulated from earning 125% above the state's poverty line to 225%.This leaves more money in borrowers' pockets.
"The average interest rate will go from 10% to 5% for undergraduates. And it will be 10% for grads. So that to me, is a big piece of it. The second big piece of course is the loan forgiveness after the life of the loan period. So after 20 years it will be forgiven," said Vice President of Admissions and Aid at Lamar University, Deidra Mayer.
Graduate students will have to pay their loans for 25 years until their remaining debt is forgiven.
"It gets to be really expensive with all of those costs. Whether it's buying all of your books, paying for the courses to pass your exams, so I think that forgiveness after 20, 25 years is really really great," said Maglalang.
The new plan will help students not be burdened by student debt for as long as they are now.
"This loan repayment is just a piece of the bigger picture for students and those looking to go to college. I think that it is obtainable and it is affordable. More so that we think," said Mayer.
The new plan will be implemented by the Department of Education by July 1, 2024. Parts of this plan will go into effect summer of 2023.