White House Unveils SAVE Plan: A Bold Initiative to Alleviate Student Loan Debt Burden for Millions
White House launches SAVE plan to assist borrowers with student loans, cutting payments, increasing $0 monthly payment eligibility, and aiming to alleviate debt burden after Supreme Court invalidated previous forgiveness plan.
The White House unveils the Saving on a Valuable Education (SAVE) plan following the Supreme Court’s invalidation of the initial student debt forgiveness plan. (PHOTO: Jamaica Gleaner)
White House’s SAVE Plan Promises Half-Cut Payments and $0 Monthly Options to Aid Low-Income Student Loan Borrowers
The White House launched a new initiative called the Saving on a Valuable Education (SAVE) plan, one month after the Supreme Court invalidated the Biden administration’s initial student debt forgiveness plan. According to reports, this program aims to assist borrowers and expand options for low-income individuals burdened by student loans. Under the SAVE plan, undergraduate loan payments will be cut in half compared to another income-driven repayment (IDR) plans, ensuring borrowers’ balances do not grow if they make required payments and protecting more of their income for basic needs.
The Department of Education estimates that the SAVE plan will significantly increase the number of borrowers eligible for $0 monthly payments, extending further assistance to approximately one million borrowers. According to the reports, those earning less than $15 per hour will qualify for $0 payments, while others will still save at least $1,000 annually on payments compared to the existing Revised Pay-As-You-Earn (REPAYE) plan.
Starting from July 1, 2024, borrowers who qualify for the SAVE plan will only be required to pay 5% of their discretionary income, a reduction from the current 10% under REPAYE. Additionally, some borrowers may have their remaining debt forgiven after making payments for the equivalent of 10 years, provided their principal balance is $12,000 or less. This was reported in Yahoo News.
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SAVE Plan Introduces Interest Waivers and Spousal Income Exemption, Estimated Cost Surpasses Previous Forgiveness Program
The Department of Education will not charge any unpaid interest not covered by the borrower’s monthly payment under the new SAVE proposal, preventing the overall loan from increasing due to accrued interest, as reported. Furthermore, married borrowers will no longer be required to include their spouse’s income, even if they file taxes separately, which was a requirement under the REPAYE plan.
Yahoo News also reported that the Wharton School of the University of Pennsylvania estimates that the SAVE plan will cost approximately $475 billion over ten years, slightly higher than the previously invalidated student loan forgiveness program, which was expected to cost $400 billion. Notably, the Department of Education forgave $39 billion in student loan debt earlier this month, benefiting around 800,000 Americans who had been in repayment for 20-25 years.
The beta version of the SAVE plan website is available at https://studentaid.gov/idr/. Borrowers can opt-in for automatic recertification of forms on an annual basis. The beta website will be fully launched in August, and borrowers enrolled in the existing REPAYE program will be automatically switched to the SAVE plan, as reported.
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