4M+ Borrowers Join Biden’s SAVE Plan
The U.S. Department of Education Enrolls Over 4 Million Borrowers in New Repayment Program
The U.S. Department of Education made an exciting announcement on Tuesday, revealing that over 4 million federal student loan borrowers have enrolled in the Biden administration’s new repayment program. This program, called the Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan, offers borrowers the opportunity to have zero monthly payments.
With the pause on federal student loan repayment set to end in October and the Supreme Court overturning the White House’s one-time debt relief program, the Department of Education introduced the SAVE plan in June as a solution. Since July 30, they have received more than 1.6 million IDR plan applications through StudentAid.gov, with nearly 1 million of those applications specifically for the SAVE plan.
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The new IDR scheme calculates payments based on a borrower’s earnings and family size and forgives outstanding amounts after a certain number of years. Under the SAVE plan, borrowers are not required to make payments if their income falls below 225 percent of the federal poverty line, which is equivalent to $32,800 annually for an individual. This is a significant increase compared to the current plans, which set the cutoff at 150 percent of the poverty line, or $22,000 a year for a single person.
The Department of Education has reached out to approximately 30 million borrowers about the new program. The states with the highest enrollment of borrowers in the program are Texas, California, Florida, New York, and Pennsylvania.
“Millions of borrowers are already benefitting 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,” said U.S. Secretary of Education Miguel Cardona in a statement.
Secretary Cardona continued, “From Day One of this Administration, President Biden has focused on reducing the burden of student loan debt on working families, and we are not stopping now. Enrollment is quick and easy, and we are working relentlessly to get the word out to borrowers about how millions can reduce their monthly student loan bills and save over a thousand dollars a year by enrolling in SAVE.”
The Biden administration’s priority is to support borrowers as they prepare to return to repayment with the tools and resources they need, according to Jason Miller, deputy director for management at the Office of Management and Budget.
The SAVE Plan provides substantial relief, especially for borrowers with lower incomes. Single borrowers earning less than $15 an hour while supporting a family are exempt from payments. Those earning more will save over $1,000 annually compared to other IDR plans.
“We’re not just lowering payments for today’s borrowers, we’re helping entire families and communities, and we’re making paying for college more affordable for millions of future students,” said James Kvaal, the undersecretary of education.
Unpaid interest will not increase on the SAVE Plan as long as individuals meet their payment obligations. Additionally, the SAVE Plan is open to people who have defaulted on student loans, regardless of when the default occurred. These individuals can access a one-time opportunity through the Fresh Start program, specifically designed for those who have defaulted on federal student loan payments.
The Biden administration has approved over $117 billion in targeted relief for 3.4 million student loan borrowers. This includes funds for fixing historical inaccuracies in IDR payments, enhancing Public Service Loan Forgiveness, supporting disabled borrowers, and aiding those affected by school-related issues.
Although the temporary pause of federal student loan payments is scheduled to end soon, the Department of Education’s new SAVE plan offers hope and relief to millions of borrowers across the country.
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