On the heels of the U.S. Supreme Court’s ruling eliminating student loan debt cancellation, the Biden administration scrambled to find a workaround.
In the first week of July, about two weeks from the Court’s ruling, the Biden administration announced its new plan to “forgive” (i.e. cancel) student loan debt for borrowers. The administration said that the SAVE plan will cost $156 billion over the next ten years.
Called the “SAVE” plan, the Biden administration plans to lower monthly payments for borrowers, cut accrual of interest on these loans, and try to speed up loan cancellation for borrowers with smaller amounts of debt. But the major issue facing the administration is that it will delay slashing payments for undergraduate student borrowers until July 2024. The plan will only lower the monthly payment amount for undergraduate student borrowers, but not graduate student borrowers.
The enrollment phase will start toward the end of the summer and will move existing registered borrowers by October, which is the due date for first debt repayments.