Last year, The Collegian reported on President Joe Biden’s effort to pass a student loan forgiveness program nationwide. Though these attempts initially failed, it looks like Biden has not given up on the idea.
The president’s new “Saving On A Valuable Education,” or SAVE Program, has survived a vote in the United States Senate. Here is what college students need to know.
Last year the Biden administration argued that under the HEROES Act of 2003, the Secretary of Education is permitted to ignore provisions concerning student loans during times of war and national emergencies. Many suspected that Biden would use the COVID-19 pandemic as a national emergency, ushering in mass student loan forgiveness.
Biden’s efforts were thwarted by the Supreme Court, which struck down his attempt to forgive hundreds of billions in student loan debt. Given the conservative majority on the court, Biden has seemingly learned his lesson from 2022, and is back with a more tame variant of student loan forgiveness.
The White House has pitched the SAVE Program as “the most affordable student loan repayment plan ever.” The Biden administration intends to lower monthly student loan repayment costs for tens of millions of Americans.
Student loan debt will be cut in half, as borrowers with undergraduate loans will have their payments reduced from ten to five percent of their discretionary income. Those who have undergraduate and graduate loans will pay a weighted average between five and ten percent of their income based on the initial principal balances of their loans.
Some former students will have their debt canceled entirely. Since the program is adjusted to income, a byproduct will be to eliminate payments from the most financially burdened of borrowers. This way, those who cannot make their payments will not be expected to make them.
Payments due will also never grow. As long as the borrower continues to make timely payments, the amount due will never increase as a percentage of the borrower’s income.
Some notable provisions exist within the program that will only apply to specific groups. For instance, a new teacher with a bachelor’s degree will see a 67 percent reduction in total payments, saving an average of nearly $20,000, while pursuing Public Service Loan Forgiveness.
The White House has noted that if the plan goes into effect, 85 percent of community college graduates will be debt-free in a decade. Additionally, the typical undergraduate university student will see a $2,000 reduction in payments per year.
The plan survived the United States Senate, as a Republican-led effort to halt the program failed in a 50-49 vote. Republicans have continued to slam the program as a “free college scheme,” even though the program is less aggressive than previous attempts to nullify college debt.
The program has already enrolled nearly six million Americans, with President Biden seemingly not open to criticisms or revisions to the program his team has created. Democrats are standing by this new attempt at student loan forgiveness, and could very well get it done before the 2024 elections.