Saving on a Valuable Education (SAVE) Plan
Many of us vividly remember getting our first paycheck as a postgraduate, it really felt like finally hitting it big—until realizing how much of it goes towards paying off student loans. Student loan debt is a widespread experience, and disproportionately impacts people of color, individuals from low-income households, and first-generation college students. As leaders of color, we are uniquely positioned to understand that student loan debt is one of the biggest barriers to economic prosperity for our communities. Pursuing higher education is meant to open doors and opportunities, not shut them.
That’s why last year, we welcomed the Department of Education’s final rule to improve Income Driven Repayment (IDR) plans, especially after the disappointing Supreme Court ruling on student loan forgiveness. The ruling struck down the Biden Administration’s student loan forgiveness plan, which would have canceled up to $400 billion in student loans and alleviated long standing racial and economic inequities disproportionately leaving borrowers of color with greater student debt. Despite the ruling, the Biden Administration continued to seek ways to alleviate the burden of student loan debt, a critical national imperative, and announced the SAVE plan—an IDR plan that calculates payments based on a borrower’s income and family size, not their loan balance, and forgives remaining balances after a certain number of years.
As a nationwide organization harnessing the power of its membership Network to ensure young people of color have the opportunities to build generational wealth and thrive, it was imperative that EdLoC uplift the voices of our members and comment on these reforms. We were pleased that the final rule retains features we highlighted in our comments that will help more borrowers avoid default and better afford student loan payments.
While the SAVE plan was a crucial step towards equity and justice, it continues to be challenged in the courts. Now, two groups of Republican-led states have sued President Joe Biden over the SAVE plan, arguing he is once again overstepping his authority to cancel student debt. Last month, federal appellate judges ruled that the SAVE plan could continue to operate as legal challenges to the program work their way through the courts. Soon after, three states filed an emergency Supreme Court petition in response, which seeks to halt the SAVE program. As the future of the plan is uncertain, the Department of Education has placed three million borrowers under interest-free, administrative forbearance.
As these programs to alleviate student loan debt continue to be contested, it is imperative that we keep paying attention and raise awareness as legal challenges unfold. Ultimately, relief through student loan forgiveness is essential to creating a fair and equitable society.
If you are interested in learning more about EdLoC’s policy work, please contact Angelica Solis-Montero, Chief Policy Officer at asolismontero@edloc.org.