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The federal Education Department announced Tuesday that millions of borrowers plan to rely on a generous new repayment option, a plan some Senate Republicans are calling reckless and hoping to undo.
After the Supreme Court blocked President Joe Biden’s plans for mass student loan forgiveness in June, his administration created a repayment option based on borrowers’ income that would cut some borrowers’ payments in half or reduce them to zero. Eventually, the new “Saving on A Valuable Education” plan would forgive outstanding balances.
About 4 million borrowers were shifted from an older income-driven repayment plan into the SAVE plan, Education Department Under Secretary James Kvaal said on a call with reporters Tuesday. Another million borrowers have applied to participate.
The plan may be especially beneficial for lower-income borrowers: Those who make less than about $15 an hour won’t have to make any payments, and borrowers who earn more are projected to save more than $1,000 a year on payments compared with other Education Department repayment options based on income. And balances won’t grow because of accruing interest as long as borrowers stay on top of their payments, Kvaal said.
“We’re not just lowering payments for today’s borrowers,” Kvaal said, “we’re making paying for college more affordable for millions of future students. This is about making the American dream more attainable.”
New Saving on a Valuable Education' plan How to apply
But 17 Senate Republicans hope to force a vote on the new option, saying SAVE is unfair to other Americans without student loan 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,” said Sen. Bill Cassidy (R-La.).
The senators invoked the Congressional Review Act, which allows lawmakers to overturn rules issued by federal agencies. Cassidy and other lawmakers argue the new plan will encourage people to take on student loan debt and “turn the federal student loan financing system into a poorly targeted taxpayer-funded grant program,” they said in a statement.
Republican Rep. Lisa McClain of Michigan introduced a companion measure in the House.
To pass, a Congressional Review Act resolution requires a simple majority in the House and Senate. But Biden would almost certainly veto a measure attempting to undo the SAVE plan.
Contributing: Alia Wong, USA TODAY
This article originally appeared on USA TODAY: Why Biden's new student loan relief plan faces Republican challengers