Over 4 Million Borrowers Enroll in Biden’s SAVE Plan

The U.S. Department of Education announced the enrollment of over 4 million federal student loan borrowers in the Biden administration’s new repayment program.
Over 4 Million Borrowers Enroll in Biden’s SAVE Plan
U.S. President Joe Biden walks on the south lawn of the White House in Washington on Sept. 4, 2023. Tasos Katopodis/Getty Images
Caden Pearson
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The U.S. Department of Education on Tuesday announced the enrollment of over 4 million federal student loan borrowers in the Biden administration’s new repayment program.

As the pause on federal student loan repayment is set to end in October, and with the Supreme Court overturning the White House’s one-time debt relief program, the Department of Education introduced the Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan in June. This plan offers some borrowers the possibility of having zero monthly payments.

The department has also reported that, since July 30, they have received more than 1.6 million IDR plan applications through StudentAid.gov. Nearly 1 million of these applications are for the SAVE plan.

The new IDR scheme calculates payments according to a borrower’s earnings and family size and forgives outstanding amounts after a certain number of years.

Under the new plan, borrowers won’t be obligated to make payments if their income falls below 225 percent of the federal poverty line, which amounts to $32,800 annually for an individual. This is a notable increase compared to the current plans, which set the cutoff at 150 percent of the poverty line, equivalent to $22,000 a year for a single person.

Around 30 million borrowers have been contacted by the department about the new scheme. The states currently with the largest enrollment of borrowers in the program are Texas with 345,800 participants, California with 331,600 participants, Florida with 291,100 participants, New York with 212,800 participants, and Pennsylvania with 170,200 participants.

“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.

“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,” he continued. “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.”

Jason Miller, deputy director for management at the Office of Management and Budget, told reporters on a call Tuesday that the Biden administration’s priority is to “support borrowers as they prepare to return to repayment with the tools and resources that they need.”

The SAVE Plan provides substantial relief, particularly to 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.

The SAVE Plan is also open to people who have defaulted on student loans, regardless of when they occurred. These people can access a one-time opportunity through the Fresh Start program, which is specifically designed for individuals 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 conclude in October, borrowers will receive an additional 12-month grace period before they need to commence repayments. However, interest will start accruing this month.

Democrats expect lawsuits to challenge the plan, but Sen. Chuck Schumer said in August that he believes the scheme is legally sound.

“While there will be those that will challenge this in court, the administration has carefully crossed the legal t’s and dotted the legal i’s,” Mr. Schumer said on Aug. 22.

On Aug. 4, a constitutional rights group, the New Civil Liberties Alliance (NCLA), filed a lawsuit in federal court to halt the implementation of the SAVE Plan. The complaint was filed in the U.S. District Court for the Eastern District of Michigan on behalf of the Cato Institute and Mackinac Center for Public Policy.

The NCLA has described the plan as a “scheme” that would “cancel even more debt prematurely at taxpayer expense for another 2.8 million IDR borrowers in the future.”

The group says that the administration “has no lawful authority to do this” and that the plan violates the “Constitution’s Appropriations Clause, which grants Congress near-exclusive authority to cancel debt owed to the Treasury.”

This program will commence on Oct. 1 and continue until Sept. 30 next year.

Ross Muscato contributed to this report.
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