The Biden-Harris administration heralds its new flagship student loan repayment plan as one of the “most affordable” to ever exist. Aimed at lowering monthly payments for millions of borrowers, the “Saving on A Valuable Education” or SAVE initiative even sets payments to $0 for some students (They may have read our guide to student loans).
On the flip side, the Republicans were quick to bash the plan, tagging it as a “free college scheme”. In September, Senator Bill Cassidy introduced a joint resolution with other congressional Republicans to overturn Biden’s “reckless income-driven repayment (IDR) rule”.
According to them, the SAVE scheme could leave taxpayers on the hook for as much as $559 billion, making it the costliest regulation in US history. In the Congressional Review Act (CRA) resolution, the conservative critics argued that the Biden administration was just promoting the SAVE scheme “as a solution to America’s broken student loan system”:
“The only difference between President Biden and a snake oil salesman is a title……In reality, the SAVE scheme is a desperate effort to curry favor and buy votes ahead of the next election.
On late Wednesday, the Senate floor heard Cassidy commenting on the plan saying: “Where is the forgiveness for the guy who didn’t go to college but is working to pay off the loan on the truck he takes to work? This is irresponsible. It is deeply unfair.”
However, the Democrat-controlled Senate managed to narrowly strike down this Republican-led effort. They voted majoritarily along party lines in a 49-50 vote, making the latest challenge to Biden’s generous repayment plan null and void.
On the occasion of the measure failing to pass the house, Senate Majority Leader Charles Schumer said: “I’m very glad this chamber had the good sense to defeat it. This is a real victory for our young people and for the future of America.”
Earlier in the same week, the President had indicated in a memo that he would veto the joint resolution anyway in case it passes Congress and reaches his desk.
The new repayment plan has already attracted nearly 5.5 million borrowers, according to the Education department as of November. Out of this, about 2.9 million have their payments set at $0. The interest for borrowers and base monthly loan repayments are capped according to their incomes and family sizes.
The press release further stated that the borrowers enrolled in SAVE are saving an estimated $102 a month ($1,224 a year) compared to what they would have paid on the Revised Pay As You Earn (REPAYE) plan. Calling this the “most affordable repayment plan ever”, Education Secretary, Miguel Cardona, was quoted as saying:
“Under President Biden, the Department created the SAVE Plan so that young people and working families can climb the economic ladder without unaffordable student loan debt weighing them down. I’m thrilled to see that in less than three months, nearly 5.5 million Americans in every community across the country are taking advantage of the SAVE Plan’s many benefits, from lower monthly payments to protection from runaway student loan interest.”