Biden’s Administration launches SAVE student loan repayment plan to cut down on monthly deduction

On 5th September, Tuesday, the Education Department officials announced that the Biden administration's new student loan repayment plan has received a good response. SAVE, short for “Saving on a Valuable Education,” plan was launched in late July and aims to reduce the monthly repayments of more than 20 million students. In an old news article, we covered that the Biden administration was planning to offer $39 billion to the 800K borrowers who would be eligible for this plan.

As per the latest student loan news, this step of Biden’s government will play a significant role in helping students and cutting off the burden from the heads of many. This income-driven repayment plan (IDP) focuses on lowering individuals' out-of-pocket costs. The plan has seen a record 4 million people enrolled for it so far since its launch. As per the Education Department, most of these 4 million enrollees deviated from an earlier plan called the REPAYE program. The program is open for students enrolling for this summer as well. Hence, per the sources, an additional 1 million borrowers have also applied for the program. 

Well, a few are taking this move of Biden’s administration in a positive way; at the same time, some are against it, claiming it as an unfair decision. Republican Sens. Bill Cassidy of Louisiana and John Thune of South Dakota, along with other GOP colleagues, have issued a Congressional Review Act resolution to challenge the new student loan repayment plan led by Biden. 

In the latest interview, Cassidy stated, "Once again, Biden's newest student loan scheme only shifts the burden from those who chose to take out loans to those who decided not to go to college, paid their way or already responsibly paid off their loans."

However, the news of blocking the execution of the student loan repayment plan was not taken positively by the common public. “We condemn this move to block a plan that will provide significant financial relief to low-income borrowers and communities of color,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending.

How Does the SAVE Plan Work?

The SAVE plan aims to reduce the percentage of the amount one pays towards student loan debt from their income. Currently, the percentage of amount borrowers pay stands at 10% for undergraduate loans above the poverty line of 225%, but with the SAVE plan, the percentage will drop down to 5%, as stated by the Biden administration. 

Who will be eligible for the SAVE Plan?

Furthermore, as per the Education Department, the plan is available to borrowers with a direct loan in good standing. There are a few plans that are eligible for this program, such as - 

1. Direct Subsidized Loans
2. Direct Unsubsidized Loans
3. Direct PLUS Loans made to graduate or professional students 
4. Direct Consolidation Loans that did not repay any PLUS loans made to parents.

Amidst the launch of the new student loan repayment plan and the rising disagreement from the Republicans, the common public has shown their approval and happiness towards this move. However, we await how this scheme will benefit students and lessen the burden of repaying heavy payments.