President Joe Biden’s newest bid for student loan relief has gone live—taking applications for reduced payments and less strict payback requirements.
Key Details
- On August 24, 2022, President Biden announced an executive order providing up to $10,000 in debt cancellation for non-Pell Grant recipients and $20,000 in debt cancellation for Pell Grant recipients.
- On June 30, 2023, the United States Supreme Court ruled six to three that Biden overstepped his legal authority and struck down the $400-billion executive order.
- On July 6, Biden responded to the decision by announcing the Saving on a Valuable Education (SAVE) plan.
- On July 14, the Education Department announced that 804,000 borrowers would have their student debt eliminated due to corrections in the department’s accounting processes.
- On Sunday, the White House told CNN that the beta version of the program’s website was live and that applicants could begin enrolling for the plan at https://studentaid.gov/idr/, with a full website rollout scheduled for August.
Why It’s Important
In the past year, the Biden Administration has made student loan debt relief one of its biggest priorities—trying to alleviate the outstanding $1.5 trillion in debt hampering the lower and middle classes. This move has been highly popular among young voters. As we previously reported, 79% of millennials believe some or all student loan debt ought to be forgiven in some form, compared to 48% of baby boomers.
SAVE offers a new income-driven repayment plan that lowers payments and eases requirements and penalties for repayment, waving interest and reducing some payments and penalties to $0. The plan allows current and future borrowers to determine their loan payments based on their income and family size, increasing the number of applicants who qualify for the new standards to those making 225% above the federal poverty line. The Education Department says this will allow 1 million new applicants to the program.
These policies have not gone without criticism. Congressional Republicans responded to last August’s executive order arguing that the policy itself is fiscally irresponsible and passes the burden along to taxpayers. The Supreme Court’s decision to strike the bill down noted the means by which it was passed into law as its primary concern, arguing that a president does not have the ability to make unilateral rule changes. Some Congressional kickback against SAVE is expected from lawmakers as the program prepares to roll out.
