Biden Pushes New Student Loan SAVE Plan Amid Republican Resistance

Another showdown appears to be brewing in the nation’s capital over the issue of student loans, with the White House pushing a new plan ease the burden on borrowers and some Republicans looking for a way to block it.

Just over two months since the US Supreme Court ruled against the administration’s plan to outright forgive about $400 billion in student debt — up to $20,000 each for millions of Americans — President Biden is now trying to make repaying student loans more affordable.

“I'm proud to announce a new program called the SAVE plan,” the President said at a news conference August 22, “It's the most affordable student loan plan ever.”

Under the SAVE (Saving on a Valuable Education) plan, payments are based on the borrower’s income, not the size of the loan. Such income-driven repayment (IDR) plans are not new, but Education Undersecretary James Kvaal says this one is more forgiving than others.

“If you earn less than about $15 an hour, you don’t have to make payments,” Secretary Kvaal explained in an interview this week, “and that’s because we don’t think student loans should come before the essentials, and above that, you pay an affordable percentage of your income.”

Other similar repayment plans set monthly payments at about 10% of the borrower’s income. The SAVE plan sets payments at 5% of the borrower’s income.

For loans less than $12,000, a borrower who makes regular payments for ten years will then have what remains forgiven. For larger loans and graduate school loans, 20 or 25 years of payments are required before any remaining balance is dropped. 

Kvaal says, based on current participation levels in federal loan repayment programs, the administration estimates the SAVE plan will cost taxpayers between $100-150 billion over 10 years, but he says it is a most worthwhile investment. 

“Because we’re talking about not only 40 million Americans now who have student loan debt,” Kvaal explained, “but their families, their communities are all hurt when borrowers can’t afford to buy a home or take a chance on starting a business.”

Some Republicans, however, say this is just more reckless spending and plan to try and pass a resolution to stop it.

In an interview on Thursday, Oklahoma Senator James Lankford said he was not totally familiar with the program but has overarching concerns with the message it sends regarding paying off debt.

“It’s entirely reasonable to give people time to be able to repay and have that be income-driven,” Sen. Lankford (R-OK) said, “but people do need to be encouraged to actually repay the loan. We shouldn’t set up an America that you sign papers saying I’m going to repay it, but you actually don’t.”

With student loan repayments scheduled to resume in October after a three-year, Covid-induced pause, four million Americans — including 45,000 Oklahomans – are so far signed up for the SAVE plan. If you are interested, go to studentaid.gov for more information.