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Friday, September 22, 2023


The SAVE program: What you need to know about Biden’s debt relief plan

Jose Gonzalez-Campelo/The Cougar

In the weeks since the Supreme Court struck down President Joe Biden’s student debt relief program, the administration along with the Department of Education have been working toward a replacement — the Saving on a Valuable Education plan. 

SAVE is a revamped, income-driven repayment plan that allows borrowers to pay their monthly payments based on their income and family size. 

“The biggest change from the current income-driven repayment plans is reducing payments from 10% of an individual’s discretionary income to 5%,” said UH assistant political science professor Alex Badas. “For some people, this will result in $0 monthly payments.”

The 10% figure was the original cutoff for payments made under the Revised Pay-as-You-Earn plan. Borrowers who are currently enrolled in REPAYE will be automatically enrolled in SAVE.

Another major change will allow the Department of Education to limit the way interest accumulates. If borrowers keep up with their monthly payments, an additional amount will not be added to their bill as a result of incurred interests, Badas said. 

The Biden-Harris administration has provided debt relief for 3.4 million Americans and has canceled more than $116 billion in student loans under this plan, according to the White House. The administration stated that up to 20 million borrowers could potentially benefit from SAVE.

“I’m glad they’re still trying to find ways to make it work,” said Abbie Culver, a public administration graduate student. “But I think they could do more.”

Like Biden’s debt relief program, the SAVE plan is also being contested in court. 

“Some groups have already filed lawsuits to prevent changes to the law in court. It is possible that a case involving the SAVE plan will make it to the Supreme Court,” Badas said. 

Last week, some GOP senators and House members filed legislation aimed to force a vote on the SAVE plan. They say that the SAVE plan is unfair to other Americans without any student loan debt. 

The plan will be of benefit to college students but unintended consequences could further the gap between traditional college students and other types of education, said economics junior Micah Erfan. 

“The SAVE plan represents a substantial transfer of taxpayer dollars to students,” Erfan said. “In this, it will benefit us college students, but it will also deepen the government support gap between college and apprenticeships, high-quality internships, vocational education and on the job training.”

The income-driven plans require borrowers to make payments on their student loans for at least 20 to 25 years before receiving forgiveness on any outstanding balances. The SAVE plan will allow borrowers who have a balance of $12,000 or less to receive forgiveness after 120 payments, according to the White House. 

For every $1000 borrowed above the $12,000 limit, the plan would require 10 additional payments for up to a maximum of 20 or 25 years. 

“The plan provides short-term debt relief. So, I think Biden has partially fulfilled his campaign promise. I think before larger conclusions are made; we’ll need to see what other policies President Biden tries to introduce beyond the SAVE plan,” Badas said. 

Borrowers already enrolled in the REPAYE plan will automatically be enrolled in the SAVE plan.

The Department of Education has partnered with grassroots organizations to start an outreach campaign: SAVE on Student Debt. The campaign is aimed at informing borrowers about SAVE and other debt relief programs offered by the department.  

After years of pause on student loans due to the COVID-19 pandemic, repayments will resume in October. However, loan interest resumed Sept.1, according to the Department of Education.  

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