More than four million student loan borrowers have signed up for a new income-driven repayment plan, the Education Department announced Tuesday as congressional Republicans moved forward with House and Senate resolutions to block that plan.
Louisiana senator Dr. Bill Cassidy, the top Republican on the Senate Health, Education, Labor and Pensions Committee, said in a statement that the plan known as Saving on A Valuable Education (SAVE) would be costly and unfair to borrowers, would result in fewer student loans getting repaid and would incentivize students to take on more debt.
“Once again, Biden’s newest student loan scheme only shifts the burden from those who chose to take out loans to those who decided not to go to college, paid their way, or already responsibly paid off their loans,” Dr. Cassidy said.
Dr. Cassidy and other Republicans are seeking to use the Congressional Review Act to overturn the SAVE plan. Under the act, a simple majority of lawmakers in the House and Senate can vote to block the administration from carrying out a rule, though a CRA resolution is subject to a presidential veto.
Under SAVE, which department officials have touted as the “most affordable IDR plan ever,” a single borrower earning less than $15 an hour will not have to make any payments on their loans, and unpaid interest will be waived as part of the first round of changes that took effect July 31. Undergraduate borrowers would see their payments cut in half starting next summer, while those who borrow $12,000 or less would be eligible for forgiveness after making payments for a decade, among other changes.
Student loan payments will be due starting next month following a three-year pause related to the COVID-19 pandemic.
“We know that student loan bills are challenging for a lot of families, and we want to do everything we can to make sure borrowers take advantage of the benefits that come with a federal student loan,” Under Secretary James Kvaal said at a virtual news conference Tuesday.
Michigan representative Lisa McClain and North Carolina representative Virginia Foxx, both of whom are Republicans and sponsors of the House resolution, said in a joint statement that the challenges of the federal student loan system need to be tackled head-on, “not with gimmicks and false promises.”
“The only difference between President Biden and a snake oil salesman is a title,” the joint statement said. “Biden’s administration knows what it’s doing is illegal but it’s pushing forward anyway, promoting its SAVE scheme as a solution to America’s broken student loan system. In reality, the SAVE scheme is a desperate effort to curry favor and buy votes ahead of the next election.”