More than 4 million people have enrolled in the Biden administration’s new income-driven repayment plan that will cut monthly student loan payments, while Senate Republicans call it a reckless move that will cost taxpayers billions.
The Biden administration announced the income-driven repayment plan in August. It calculates payments based on a borrower’s income and family size and forgives remaining balances after a certain number of years.
According to Biden administration officials, the SAVE plan will “cut many borrowers’ monthly payments to zero” and will save borrowers roughly $1,000 per year. The plan also prevents balances from ballooning due to unpaid interest.
“Millions of borrowers are already benefiting from enrollment in the SAVE plan, and 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,” Education Secretary Miguel Cardona said in a statement.
President Biden has made eliminating student loan debt a top priority. In July, he signed an executive order that canceled more than $116 billion in student loan debt for $3.4 million borrowers. It followed his failed attempt to expunge $400 billion in student loan debt, which was blocked by the Supreme Court.
Under the latest repayment plan, a borrower who makes less than $15 an hour will not have to make any payments, and those who earn more than that could save more than $1,000 a year.
Republicans have voiced their dislike of the plan and have made moves to stop it. On Tuesday, a group of 14 Republican Senators introduced a resolution to overturn Mr. Biden’s plan, calling it “reckless.”
The effort, led by Sen. Bill Cassidy, Louisiana Republican and ranking member on the Health, Education, Labor and Pensions Committee, would use a law that allows Congress to overturn regulatory actions of federal agencies. Both the House and Senate would need to vote to overturn the action, and the president can veto it.
“Once again, Biden’s newest student loan scheme only shifts the burden from those who chose to take out loans to those who decide not to go to college, paid their way, or already responsibly paid off their loans,” Mr. Cassidy said in a statement. “Our resolution protects the 87% of Americans who don’t have student debt and will be forced to shoulder the burden of the president’s irresponsible and unfair policy.”
According to a report by the Penn Wharton Budget Model released in July, the SAVE plan would cost taxpayers as much as $558.8 billion over the next ten years. The report also said a majority of the student loan borrowers with bachelor’s degrees would not have to pay back even the principal on their loans.
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