Following the Supreme Court’s June decision to strike down President Biden’s student loan relief program, the administration introduced a new income-driven repayment (IDR) initiative, the Saving on a Valuable Education (SAVE) Plan. However, it now faces opposition from Republican Senate leaders who introduced a Congressional Review Act (CRA) resolution on September 5th, labeling it “reckless.”
The CRA resolution, introduced by 17 Republican senators, argues that the SAVE Plan could cost taxpayers up to $559 billion and result in many bachelor’s degree student loan borrowers not repaying their principal.
Zack Geist, founder of Student Loan Tutor, expressed doubt about the CRA resolution passing, noting that the Department of Education had been working on the plan since September 2022 and criticized the attempt to reverse it just before resuming payments for over 42 million borrowers.
Even if the SAVE program were blocked, borrowers could still enroll in the Revised-Pay-As-You-Earn (REPAYE) plan. However, it’s unlikely that the SAVE plan won’t be implemented. Simultaneously, the Department of Education announced that over four million borrowers had enrolled in the SAVE Plan, including those transitioning from REPAYE.
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The SAVE Plan
It received 1.6 million IDR applications through StudentAid.gov since July 30, with nearly a million for the SAVE plan. The SAVE Plan, effective July 1, 2024, reduces payments to $0 for many earning $32,800 or less (or $67,500 for a family of four) and saves others at least $1,000 annually. It also raises the income exemption to 225% of the poverty line.
Experts advise borrowers to prepare for payment resumption, regardless of legislative developments. Bridget Haile, Chief Customer Officer at Summer, emphasizes enrolling in the SAVE plan or making preparations to exit default or transition to a new servicer.
Employers can also support employees with student loans, contributing directly to payments or integrating support into retirement plans. Michael Micheletti, Chief Communications Officer at Unlock Technologies, notes that Congress holds budgetary responsibility for significant government expenditure, not the president.
This ongoing uncertainty leaves student loan holders unsure about relief sought since the pandemic’s start. The SAVE Plan faces opposition, raising questions about its future benefits for borrowers. The evolving landscape of student loan repayment plans underscores the debate about budgetary responsibility and the need for clarity.
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Source: Yahoo Finance
