Student loan repayment plan draws thousands of Nebraskans

In a videoconference call with reporters Tuesday, James Kvaal, deputy undersecretary for the U.S. Department of Education, said more than 4 million Americans with student loan debt applied for the Saving on a Valuable Education program in the first month it became available.

SAVE considers a borrower’s earnings and family size in setting monthly payments for their federally subsidized student loans, but caps the monthly payment amount between 5% and 10% of their income.

It also allows borrowers to give the education department access to their latest tax return from the Internal Revenue Service, which will allow them to skip having to remember to certify their earnings every year or reapply for an income-driven repayment program.

There is no income cap on the program, but Kvaal said borrowers who make less than $15 per hour, or a little more depending on how many people are in their family, will not be required to make any payments under the new program.

Borrowers who enroll in SAVE also won’t see their loan balance grow due to unpaid interest as long as they continue to make monthly payments, and it scales the time forgiveness that becomes available based on the amount owed above $12,000.

For example, a student loan borrower who took out $15,000 in loans and made regular payments would be eligible for forgiveness after 15 years if their income was not high enough to pay off the total debt owed.

Undergraduate borrowers with more debt than that — in Nebraska, the average federal student loan debt is nearly $32,000 — would be eligible for forgiveness after 20 years. Debt for graduate school becomes eligible for forgiveness after 25 years.

“Student loans shouldn’t push you deeper into poverty or come before basic living expenses,” Kvaal said, adding the SAVE plan was the “most affordable repayment plan ever created.”

Under the new plan, according to Kvaal, the typical borrower could save up to $1,000 per year in student loan costs.

To date, the U.S. Department of Education has reached out to 30 million borrowers to invite them to apply for the new program, Kvaal said, and is planning a series of outreach events to educate individuals who may qualify.

To apply, borrowers can visit studentaid.gov to use a Loan Simulator to find out which repayment plan works best for them.

“Enrollment is quick and easy, and we are working relentlessly to get the word out to borrowers about how millions can reduce their monthly student loan bills and save over a $1,000 a year by enrolling in SAVE,” said Secretary of Education Miguel Cardona.

The SAVE program was unveiled after the U.S. Supreme Court, in a 6-3 decision on a lawsuit brought by Nebraska and five other states, struck down a loan forgiveness program announced last summer.

As many as 97,000 Nebraskans were notified they qualified for up to $20,000 in loan forgiveness before a lawsuit filed by Nebraska and five other states was successful in stopping it from being implemented.

While the forgiveness program was ended before any debt was discharged, other programs rolled out by the Biden administration in the meantime have benefited borrowers in the Cornhusker State.

In May, the White House announced nearly 4,000 student loan borrowers enrolled in the Public Service Student Loan Forgiveness program had more than $230 million in debt canceled over the prior 18 months.

On average, Nebraskans had $59,000 in debt forgiven through the program designed to steer college graduates into careers as educators, first responders, military service members, or other public service jobs.

And in July, as many as 5,700 student loan borrowers on other income-driven repayment programs owing nearly $269 million were notified their balances would be wiped out after changes were made in how payments were calculated.

Bharat Ramamurti, deputy director of the National Economic Council, said the Biden administration did not anticipate any legal challenges to the new program, adding it made changes to an existing plan available to borrowers.

Ramamurti also told reporters the Education Department was working on other plans aimed at providing debt relief to borrowers “as quickly as possible.”