Biden-Era Student Loan Plan Faces Major Overhaul as New Settlement Takes Shape

The U.S. Department of Education announced Tuesday that it had reached a proposed settlement agreement to end a popular, yet controversial Biden-era student loan repayment plan. The Saving on a Valuable Education plan, better known as SAVE, was the most flexible and generous of all income-driven repayment plans, promising expedited loan forgiveness and monthly payments as low as $0 for low-income borrowers. Republican state attorneys general, led by Missouri, sued the Biden administration, arguing in court that SAVE was too generous. According to the proposed settlement, millions of borrowers currently enrolled in SAVE would be required to start making payments on their loans once again. This comes after months of uncertainty for these borrowers, who were not required to make payments on their loans even after many had already spent years in a pandemic payment pause. Interest resumed accruing on SAVE loans in August. Under Secretary of Education Nicholas Kent stated, "The law is clear: if you take out a loan, you must pay it back." Kent's comments reflect the Biden administration's stance on the matter, which has been that borrowers have a responsibility to repay their loans. The SAVE plan was introduced by the Biden administration in 2021 as part of a broader effort to address the growing student loan debt crisis. The plan was designed to provide more flexible repayment options for low-income borrowers, who often struggle to make ends meet while paying off their loans. However, Republican state attorneys general argued that the plan was too generous and would ultimately lead to unfair burden-sharing among taxpayers. The proposed settlement agreement has been met with mixed reactions from student loan advocates and lawmakers. Some have expressed concern that the agreement may not go far enough to address the needs of low-income borrowers, while others have praised the Biden administration for taking steps to resolve the controversy surrounding the SAVE plan. The proposed settlement agreement is now subject to a 30-day public comment period, after which it will be reviewed by a federal court. If approved, the agreement would bring an end to the controversy surrounding the SAVE plan and allow millions of borrowers to begin making payments on their loans once again.