Over the past few years, President Biden has centered much of his education policy efforts on easing the widespread burden that student loan debt poses to millions of U.S. borrowers, and their families, especially for non-completers, women, and borrowers of color. Just a few weeks before federal student loan payments are set to resume for millions of borrowers, he and Vice President Kamala Harris announced a new income-driven repayment plan they’re calling “the most affordable repayment ever created.”
The new plan, Saving on a Valuable Education (SAVE), aims to do just that by refining the nation’s approach to post-secondary education while addressing inequities in the student loan system.
The SAVE plan offers the greatest benefit to borrowers who are low-income, which encompasses a significant portion of the Latinos in post-secondary education. In fact, borrowers in this income bracket won’t have monthly payments until their earnings rise above $15 an hour or their annual income exceeds $30,000. The plan also seeks to ease the financial pressures on graduates from both four-year universities and community colleges by reducing the repayment cap from 10% to 5% of a borrower’s disposable income–the money left after deducting essential living expenses like rent and groceries from total earnings.
“The SAVE plan is another huge step forward in President Biden’s tireless efforts to fix the broken student loan system, reduce the burden of student debt on working families, and put borrowers first,” U.S. Secretary of Education Miguel Cardona said in a Department of Education press release. “SAVE isn’t just about helping borrowers today, it’s about creating a more affordable pathway for millions of aspiring students who dream of earning college degrees and achieving the American dream—that’s exactly what the Biden-Harris Administration has fought to do since day one.”
Research by the White House Council of Economic Advisors indicates that the SAVE plan could prevent the balance for lower-income borrowers from increasing as much as 78% over a 20-year repayment period.
“The benefits of the SAVE plan will be particularly critical for the low- and middle-income borrowers, community college students, and borrowers who work in public service,” President Biden said about the new program.
He noted that with the implementation of this new plan, a significant reduction in loan payments is anticipated. Qualified borrowers could, on average, experience a 40% decrease in total payments for every dollar borrowed. Those with the lowest predicted lifetime earnings can expect an 83% reduction in payments per dollar borrowed, while the top earners will witness a 5% cut. A first-year teacher, typically with a debt of $24,425 and a starting salary of $43,596, might see payments drop by two-thirds, saving more than $17,000, while engaging with the Public Service Loan Forgiveness program. Furthermore, undergraduates can anticipate their loan payments being halved under the SAVE plan.
The administration has launched a streamlined online system, SaveOnStudentDebt.org, for borrowers to check their eligibility and register for a repayment plan. The system also allows borrowers to grant access and permission to the Internal Revenue Service (IRS) to securely take payments and automatically certify borrowers for each subsequent year.
“As long as you pay under this plan, you’ll no longer see your loan balance grow because of unpaid interest. Under the SAVE plan, monthly payments are based on your interest, not your student loan balance,” President Biden said, noting that it should take only ten minutes to fill out the online form.
Empowering Latino Students: UnidosUS Champions the SAVE Plan for Equitable Student Debt Relief
For UnidosUS, the SAVE plan represents a key step in addressing systemic disparities in the student loan system that have historically burdened and harmed the progress of the Latino community. The SAVE plan offers a chance to alleviate these challenges. It is a great step in leveling the playing field and fostering a more inclusive and equitable educational landscape.
Last month, the Department joined forces with multiple national grassroots organizations to spread the word to groups across the country about the SAVE plan. To that end, UnidosUS, in collaboration with Civic Nation, the NAACP, the National Urban League, Rise, the Student Debt Crisis Center, and Young Invincibles, is taking significant strides to empower borrowers with the essential information they need to capitalize on the student debt relief offered by the SAVE program.
“The Department of Education’s Saving on a Valuable Education (SAVE) Plan is another step toward meaningful debt relief for millions of student borrowers in our country. Mountains of student debt are obstructing the economic potential of Latinos pursuing higher education and keeping many graduates from being able to buy a house, start a family, or build generational wealth,” UnidosUS Senior Vice President of Programs Mauricio Garcia said in a press statement. “This plan will further enable Hispanic students to contribute more fully to our country’s shared prosperity while building their own economic resilience. We commend the Biden administration for their commitment to increasing accessibility to higher education and paving the way for Latinos to widen their place in America.”
“The SAVE Plan represents a transformative approach to higher education in our country, focusing on both present and future aspirations of countless students. The heavy weight of student debt has for too long hindered the ambitions of the Latino community, preventing many from realizing the pillars of the American dream – homeownership, starting a family, and building wealth” added Carmen Feliciano, UnidosUS’s Vice President of Policy and Advocacy. “This isn’t just about debt relief; it’s about reshaping the trajectory of our nation’s youth, fostering an environment where Latino students are empowered to realize their fullest potential without the looming shadow of financial burden. UnidosUS salutes the Biden administration’s commitment and echoes the call for equitable access to higher education.”
Borrowers can view more resources and tools that help them find the right repayment plan for their current circumstances at StudentAid.gov/restart. More information about SAVE is available at StudentAid.gov/save.