143,600 Michigan borrowers enroll in Biden’s student loan repayment plan

Washington ― The Biden administration says 143,600 student loan borrowers from Michigan are among 4 million who have enrolled in a new repayment plan that's meant to lower their monthly bills, though Republican lawmakers plan to challenge it.

President Joe Biden rolled out the new Saving on a Valuable Education (SAVE) earlier this summer after the U.S. Supreme Court blocked his plans for mass student loan forgiveness in June.

The new plan is a repayment option based on borrowers’ income that would cut some lower-income borrowers’ payments by half or reduce them to nothing. Bharat Ramamurti, deputy director of the National Economic Council, called it "the most affordable repayment plan ever."

The new SAVE plan was rolled out just before interest began accruing again Sept. 1 on student loan payments following a three-year pandemic-prompted suspension. Under the SAVE plan, officials said a single borrower who makes less than about $15 an hour would not have to make any payments.

"That's because we believe that student loans shouldn't push you deeper into poverty or come before basic living expenses. And above that level you are asked to pay a affordable percentage of your income," Department of Education Under Secretary James Kvaal told reporters Tuesday on a call.

After a borrower's repayment period has ended in 20 years or so, the remaining balance would be canceled.

Officials said most of the people who enrolled in SAVE were previously enrolled in a different repayment plan, and were automatically transferred. As part of the application, a borrower's most recent income information is pulled in from the Internal Revenue Service.

"We're highly confident that this plan is legally authorized," Ramamurti said. "And to my knowledge ... I don't believe that there has been that there is a legal challenge in court pending against this plan at the moment."

However, 14 Senate Republicans said Tuesday they are introducing a resolution to overturn the "reckless" SAVE plan, saying it would result in a majority of undergrad student loan borrowers not having to pay back the principal on their loans, costing taxpayers as much as $559 billion. 

The GOP lawmakers said the rule would turn the federal student loan financing system into a"poorly targeted taxpayer-funded grantprogram." 

“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,” said Sen. Bill Cassidy of North Carolina, the top Republican on the Senate Health, Education, Labor and Pensions (HELP) Committee.

“Our resolution protects the 87 percent of Americans who don’t have student debt and will be forced to shoulder the burden of the President’s irresponsible and unfair policy.” 

Michigan U.S. Rep. Lisa McClain, R-Bruce Township, introduced a companion resolution in the U.S. House.

Both resolutions rely on the Congressional Review Act that lets lawmakers to undo rules issued by federal agencies, though Biden would likely veto the measures if they pass. 

mburke@detroitnews.com