The Biden administration is set to unveil the SAVE plan this Tuesday, marking its most recent effort to alleviate student debt, following the rejection of a broader initiative by the Supreme Court.
Unveiled by President Biden, along with Education Secretary Miguel Cardona and various administration officials, the SAVE plan outlines that individuals earning about $15 per hour won’t be required to make repayments. Those with incomes exceeding this threshold can anticipate savings of a minimum of $1,000 annually compared to alternative income-driven repayment strategies.
President Biden, in a video statement released by the White House, emphasized, “Your monthly payments under the SAVE plan depend on your income, not the amount of your student loan. Commit to your payment responsibilities, and you won’t experience a rise in your loan due to accumulating interest.”
Secretary Cardona praised the initiative, noting, “The SAVE plan symbolizes a significant advancement in President Biden’s continuous endeavors to reform the flawed student loan infrastructure, alleviate the financial stress on families, and prioritize borrowers.”
However, the program’s implications have generated diverse opinions. Neera Tanden, the White House domestic policy adviser, believes it will revolutionize the financial situation for countless Americans. Contrarily, a financial oversight group anticipates a substantial expense for the public, estimating the plan’s cost to be approximately $276 billion.
Biden’s quest to address student loans hasn’t been smooth sailing, with his prior proposal, which sought to provide nationwide financial relief, being invalidated by the Supreme Court. Subsequent initiatives faced legal challenges.
Originally, Biden’s approach was predicted to have a fiscal impact of over $400 billion. After adjustments, a revised plan released in July was estimated at nearly $39 billion.
The foundation for Biden’s primary strategy was the HEROES Act, asserting it authorized the education secretary to make necessary modifications to student financial aid regulations in specific emergencies. Nevertheless, the Supreme Court rejected this rationale, asserting the act permits only minor changes to existing rules, not their complete overhaul.