White House touts $1K in savings in latest college-loan repayment plan

Aug. 22 (UPI) -- The White House announced Tuesday that its income-driven college loan repayment plan is up and running and has the potential of saving borrowers nearly $1,000 annually.

The announcement is part of the Biden administration's response to the U.S. Supreme Court ruling that shot down a prior student loan forgiveness program as unlawful in June. The justices had made that decision because the program wasn't approved by Congress.

Under the new program, borrowers can apply for the Savings on the Valuable Education Plan, which will make payments more affordable.

"This plan is a game-changer for millions of Americans, many of whom are putting off having children, buying their first home, or even starting a business because they can't get out from under their student loans," White House domestic policy adviser Neera Tanden said. "Student loans will be manageable."

Biden originally wanted to offer up to $10,000 in debt relief to all college borrowers and up to $20,000 for those who received a Pell Grant. But the Supreme Court voted 6-3 along ideological lines, saying that Congress needed to weigh in.

The administration's efforts have been frustrated by Republicans controlling the House with enough members to mount a filibuster against any student debt relief proposals.

The White House announced the SAVE Plan last month. Under the plan, qualified borrowers won't have to pay more than 5% of their discretionary spending on loan payments, down from 10%.

Borrowers making $30,000 will not have to make any payments. The White House said the new plan will affect more than 20 million borrowers.

"We refuse to go back to those days before the pandemic, when nearly a million borrowers defaulted on their loans every single year because they couldn't afford the payments," Education Secretary Miguel Cardona said.

"This is real money President Biden is putting back into the pockets of working families. And when borrowers struggle to make ends meet, we're not going to kick them while they're down."

Not all loans will qualify. The SAVE Plan applies to borrowers with direct subsidized and unsubsidized loans, as well as Direct PLUS loans for graduate and professional students, and direct consolidation loans, senior administration officials said.

Some borrowers with older loans must first consolidate them into a direct consolidation loan in order to be eligible for the new plan.