The Biden administration is talking up high enrollment for its new student loan plan even as Republicans prepare to challenge the program.
More than 4 million people have signed up for the new Saving on A Valuable Education, or SAVE, plan. But as with President Joe Biden's previous moves in the student loan space, there's no guarantee any of them will actually see it come to fruition.The White House has been laying the groundwork for the SAVE plan since mid-2022. The program would limit monthly repayments and cap interest accrual based on income and family size.
The SAVE plan also ensures that balances won't grow due to unpaid interest as long as payments are kept up with. Those making less than about $30,000 a year won't pay anything at all, while other borrowers will pay no more than 5% of their income above that amount. Any unpaid amounts would be forgiven, with remaining balances transferred to taxpayers, after no more than 20 years.
Their chief concern is that the plan would mean many or even most borrowers would never repay the principal on their loan, citing a cost to taxpayers of as much as $559 billion. They also say it does nothing to address the rising costs of college and that universities would be incentivized to raise costs further given that many borrowers would expect to have their loans written off.
The battle lines are similar to those drawn over Biden's $400 billion student loan forgiveness program, which was announced in August 2022 and ultimately struck down by the Supreme Court in June. Republicans strongly opposed the move, owing to its cost and the potential for increased future borrowing.
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