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WASHINGTON — As borrowers across the country brace to resume federal student loan payments in October, 6,300 Alaskans have enrolled in a new Biden administration repayment plan, and thousands more may be eligible.
Payments have been on a pandemic-related pause for more than three years. In the meantime, the Biden administration has pushed forward efforts to cancel federal student debt or otherwise ease the financial burden on borrowers. But the U.S. Supreme Court struck down Biden’s top initiative to cancel up to $20,000 in federal student loan debt per borrower.
The White House launched the Saving on a Valuable Education program — known as SAVE — this August, less than two months after the Supreme Court ruling.
With the income-driven repayment plan, monthly payments are set based on a borrower’s income and family size. Borrowers who make below $15 an hour will not have to make any payments. For a typical borrower, the Department of Education projects savings of more than $1,000 a year. The plan also promises that borrowers’ balance will not increase due to unpaid interest if they keep up with their payments.
The plan also forgives student debt after a certain period of years depending on how much borrowers owe. SAVE caps the time until the loans are forgiven at 20 years for undergraduate and 25 years for graduate debt.
“We believe that student loans shouldn’t push you deeper into poverty or come before basic living expenses,” Under Secretary of Education James Kvaal told reporters Tuesday.
Per capita, the number of Alaskans enrolled in the SAVE program is on par with other other states.
The White House did not say exactly how many Alaskans could be eligible for the program, but nearly 69,000 Alaskans have federal student loans, according to the Federal Student Aid office of the Education Department. Borrowers can check their eligibility and apply for the SAVE program at studentaid.gov/idr. Kvaal estimated it takes about 10 minutes to fill out the application and a month until the applications are processed
The program replaces another income-driven payment program called the Revised-Pay-As-You-Earn, or REPAYE, plan. Many now enrolled in SAVE were automatically switched over from REPAYE. Since the SAVE application was beta-tested at the end of July, over 1 million people have applied for the program and 4 million have been enrolled.
The Biden administration has announced other student loan initiatives this summer, including $39 million to forgive loans for over 800,000 borrowers. Conservative groups sued, saying the federal government did not have the authority to cancel debt, but the case was dismissed last month.
SAVE does not currently face a lawsuit.
“I think we’re highly confident that this plan is legally authorized,” Bharat Ramamurti, deputy director of the National Economic Council, told reporters Tuesday.
The program does face opposition in Congress. Seventeen Republican senators introduced a resolution to block the program Tuesday.
“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,” Louisiana Republican Sen. Bill Cassidy, who led the resolution, said in a statement.