Nearly 1M Apply for Biden’s New Student Loan Repayment Plan in First Month
Credit: Image Credit: Tasos Katopodis / Stringer / Getty Images News- President Biden’s new SAVE plan promises to slash monthly payments for many borrowers.
- Borrowers met this new plan with enthusiasm this summer.
- Some Republican lawmakers are hoping to block the rollout of the plan.
- The pause on federal student loan payments ended on Sept. 1.
President Joe Biden’s new income-driven repayment (IDR) plan for student loan borrowers quickly drew nearly a million applicants in its first month.
The Saving on a Valuable Education (SAVE) plan, which will slash monthly payments for many low- and middle-income borrowers, soft-launched in July. The Department of Education (ED) announced on Tuesday that since July 30, nearly one million borrowers have applied to enroll in the SAVE plan.
Altogether, the department said 1.6 million borrowers have applied for any federal IDR plan since July 30.
“I’m thrilled to see so many Americans submitting applications every day so that they, too, can take advantage of the most affordable student loan repayment plan in history,” ED Secretary Miguel Cardona said in a statement. “Enrollment is quick and easy, and we are working relentlessly to get the word out to borrowers about how millions can reduce their monthly student loan bills and save over a thousand dollars a year by enrolling in SAVE.”
The pause on federal student loan payments ended on Sept. 1, with borrowers’ first payment due in October.
ED’s report shows that borrowers are eager for a lower monthly payment after a three-year pause on student loan interest accrual.
The SAVE plan, which is a reworking of the Revised Pay As You Earn (REPAYE) plan, raises the percentage of a borrower’s income that is protected from payments. This means more borrowers will qualify for $0 monthly payments.
A BestColleges analysis of the SAVE plan found that a borrower with no dependents making $30,000 per year would have to pay $67.75 per month under the REPAYE plan. Through the SAVE plan, that borrower wouldn’t have to pay anything each month.
Borrowers are eligible for complete debt forgiveness after 20 years of continual repayment under the SAVE plan.
Some Congressional Republicans oppose the Biden administration’s efforts to relieve student debt burden through the SAVE plan, saying that it’s unfair to non-borrowers or those who already paid off their student loans.
On Tuesday, over a dozen Republicans in the U.S. Senate introduced a Congressional Review Act (CRA) resolution seeking to block the full rollout of the SAVE plan.
“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,” Sen. Bill Cassidy of Louisiana said in a statement.