In the two weeks since the launch of the online application portal for the Biden administration’s latest initiative to provide student loan debt relief, almost 40,000 Iowans have been enrolled. According to the U.S. Department of Education, those Iowans are among 4,609,800 Americans who are now covered by the Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan.
“Millions of borrowers are already benefiting from enrollment in the SAVE plan, and I’m thrilled to see so many Americans submitting applications every day so that they, too, can take advantage of the most affordable student loan repayment plan in history,” Sec. of Education Miguel Cardona said in a news release on Tuesday.
The SAVE plan cuts a borrower’s monthly repayment from 10 percent of their discretionary income to 5 percent. For the purposes of the plan, discretionary income is defined as the difference between a person’s adjusted gross income (the amount you fill in on line 11 of a 1040 tax form, after subtracting allowable deductions from your net income) and 225 percent of the the U.S. Department of Health and Human Services Poverty Guideline amount for their family size. For a single person, 225 percent of the current guideline is $32,805. For a family of four, it is $67,500.
“This means a single borrower who makes about $15 an hour will not have to make any monthly payments,” according to a SAVE plan fact sheet published by the White House. “Borrowers earning above that amount would save around $1,000 a year on their payments compared to other [income-driven repayment] plans.” The fact sheet also explains that borrowers who make the minimum monthly payment “will no longer see their loans grow due to unpaid interest,” according to the fact sheet.
“For example, if a borrower has $50 in interest that accumulates each month and their payment is $30 per month under the new SAVE plan, the remaining $20 would not be charged as long as they make their $30 monthly payment.”
A total of 39,900 Iowans with student loans debt had been enrolled in the SAVE plan as of Tuesday, according to the Department of Education. The plan is scheduled to go into effect on Oct. 1, but Iowa’s two U.S. Senators would like to put a stop to that.
This week, both Sen. Chuck Grassley and Sen. Joni Ernst signed with 15 other Republican senators as sponsors of a bill to declare Congress disapproves of the new student loan debt relief plan, and that the rule change necessary to implement SAVE “shall have no force or effect.”
That resolution is going nowhere. Democrats (with, as always, the possible exception of Joe Manchin of West Virginia and Kyrsten Sinema of Arizona) will never back it, and it couldn’t even attract support from a majority of the Senate’s 49 Republicans. Still, it’s a good way for a handful of senators to pander to their political base.
Of the two Iowa senators, Ernst is pandering the hardest. In a written statement, she called the SAVE plan a “student loan socialism scheme” and a “bailout that will fuel the flames of inflation.”
Grassley told journalists on Wednesday the SAVE plan “doesn’t have much to do with saving people money,” despite the fact that it will cut the amount people pay and reduce the interest their loans accrue.
“Iowans, especially low-income Iowans, are looking for ways to save at the grocery store and the gas station, so you know how they feel about the SAVE plan,” he said. The senior senator did not elaborate. But at least this time, he didn’t suggest people need to feel the burden of debt to fully appreciate their college education.
“There’s a lot of debt that’s freely taken because people choose to do it, people choose to go to college,” Grassley said in 2019 while criticizing Sen. Bernie Sanders’ plan to cancel student loan debt. “I think we all understand that you probably appreciate a little more your education if you’ve got some skin in the game.”
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