5.5 million enrolled in Biden’s student loan repayment plan

Nearly 5.5 million borrowers have signed up for President Joe Biden’s student loan repayment plan since it officially launched about two months ago, with more than half of those enrolling seeing their monthly payments reduced to $0, the White House said Wednesday.

In a call with reporters to announce the announcement, Education Secretary Miguel Cardona noted that at least one borrower in every congressional district in the country is enrolled in the plan.

“It’s really important to point out that the work that we’re doing, it’s not for red states or blue states. It’s for students and borrowers,” Cardona said. “The work that we’re doing is making sure we have access for more people across the country.”

The repayment plan — called a Value Education Savings Plan or Savings Plan — lowers borrowers’ monthly payments based on income, stops loan growth due to unpaid interest, and reduces requirements for low-balance borrowers to obtain forgiveness.

Under the plan, individuals earning less than $32,800 annually or families of four making less than $67,000 annually do not need to make monthly payments — a group that so far includes 2.9 million enrollees.

Those in the plan who make more than those thresholds will see their income-based payments reduced. These borrowers save $102 a month on average, the White House said Wednesday.

“California and Texas each have more than 450,000 borrowers enrolled in the SAVE program, while congressional districts in Missouri, Ohio and Michigan have the highest enrollment rates,” Cardona said.

“The SAVE program gives borrowers an opportunity to climb the economic ladder without being burdened by unaffordable student loan payments,” Cardona added.

The plan will not be fully implemented until July 2024.

The SAVE plan was finalized in the wake of the Supreme Court’s decision in June to overturn Biden’s plan to cancel $10,000 in student loans for those making less than $125,000 annually and up to $20,000 for Pell Grant recipients, with the court arguing that the president exceeded the White House’s constitutional authority.

In the wake of the decision, Biden focused on the SAVE plan, later referring to it as “the least expensive student loan plan ever,” during its official launch in August.

About 3 million of the plan’s enrollees so far were previously on various federal payment plans, while about 2 million have signed up directly for SAVE in the past two months, administration officials said.

But reducing monthly payments is starkly different from canceling or forgiving debts entirely. After the Supreme Court ruling, Biden also said he would not give up on more blanket debt forgiveness, saying his administration would try again under a new authority called the Higher Education Act of 1965 — something he warned would take a long time to complete.

Just last month, the Education Department released draft rules that show under the new authority the administration is moving forward with a less expansive plan than the one struck down by the Supreme Court.