WASHINGTON — The White House is moving forward with a proposal that would reduce student debt payments for millions of Americans now and in the future, offering a new path to repay federal loans on far more generous terms.

President Joe Biden announced the payment plan in August but was overshadowed by his sweeping plan to reduce or eliminate student debt for 40 million Americans. Despite the low profile of the payment plan, however, some education experts see it as a more powerful tool for making college affordable, especially for those with lower incomes.

Education Department officials on Tuesday called the new plan a «student loan safety net» that will keep borrowers from becoming overburdened with debt.

«Student debt has become a dream killer,» said Education Secretary Miguel Cardona. “This is a promise to the American people that we will finally fix a broken system and make student loans affordable.”

Biden, a Democrat, is moving forward with the payment plan even as his only debt cancellation faces an uncertain fate before the Supreme Court. The White House has asked the court to uphold the plan and reject two legal challenges from conservative opponents. The Biden administration submitted its report last week, with oral arguments scheduled for February 28.

The Department of Education formally proposed the new payment plan Tuesday by publishing it in the Federal Register, kicking off a public comment period that often takes months to navigate.

If finalized, the proposal would give a major overhaul to income-based payment plans, one of several payment options offered by the federal government. The resulting plan would have lower monthly payments, an easier path to forgiveness, and the promise that unpaid interest will not be added to the borrower’s loan balance.

The federal government now offers four types of plans based on income, but the proposal would mostly phase out three of them and focus on one simplified option, reducing the confusing array of options borrowers now face.

Under existing plans, monthly payments are capped at 10% of the borrower’s discretionary income, and those who earn less than $20,400 a year are not required to make payments. The new proposal would limit college student loan payments to 5% of borrowers’ salary, cutting their bills in half, and would require payments only for those who earn more than $30,000 a year.

As long as borrowers make their monthly payments, unpaid interest will not be charged. The change is intended to prevent borrowers from having unpaid interest added to their loan balance, a practice that can cause debt to increase even as borrowers make payments.

Significantly, the proposal would also make it easier to eliminate debt after several years of payments. Existing plans promise to cancel any remaining debt after 20 or 25 years of payments. The new plan would wipe out all remaining debt after 10 years for those who took out $12,000 or less in loans. For every $1,000 borrowed beyond that, one year would be added.

Typical graduates of a four-year university would save about $2,000 a year compared to current plans, the Biden administration says, while 85% of community college borrowers would be debt-free within 10 years.

Supporters see the proposal as a significant step toward college affordability. Some say he’s so generous that he’s moving toward free community college, a campaign promise Biden has pushed for but failed to deliver.

Opponents on the right criticize the revamped plan as an unfair handout with a high price. The Biden administration estimates the payment plan would cost nearly $138 billion over the decade, and some critics have put it closer to $200 billion.

Even some on the left have questioned the prudence of the idea, saying it’s so generous that it effectively turns student loans into scholarships that don’t need to be repaid. That could lead to more students borrowing, they warn, and could encourage colleges to raise tuition prices if they know students won’t be hard-pressed.

Others have urged the administration to abandon income-based payment plans entirely, calling them a failed policy. Critics cite a federal report from last year discovering that careless oversight of the program left thousands of borrowers stuck with debt that should have been forgiven.

Cardona said his agency is working on other proposals that would hold universities accountable if their students borrow too much. One idea promoted by Biden is to warn the public about programs that leave graduates saddled with debt.

The Department of Education began the process to achieve that goal Tuesday, asking the public about the best way to identify «low value» programs.