Written by Michael Thervil
American President Joe Biden has had a lot of bad press as of late, and we at VEDA Magazine have something to do with that as well. However, unlike FOX NEWS, we are fair and balanced so with that said we would like to congratulate President Joe Biden on passing his SAVE Plan. “SAVE” stands for Saving on A Valuable Education. The SAVE Plan will bring student loan debt relief to over 804,000 borrowers (if they've paid student loans for 20 years). Again, this is good news. However, that’s nothing when that number is compared to the whopping 43.5 million Americans who have student loan debt. Moreover, it should be noted that 6% of America has student loan debt of 100,000 or more and the monthly payments on these loans could amount to nearly $1,000 per month; with a total of 1.6 trillion dollars in student loan debt the country currently has.
Now effort is effort, and we commend anyone who puts for the effort to embark on something like this; especially in the case of Joe Bidden whose original student loan forgiveness plan was struck down by the United States Supreme Court two weeks ago. As of now and according to whitehouse.gov the SAVE Plan is an income-driven student loan repayment plan that will not only replace the previous “Pay-as-you-earn” model, but it will also:
“cut borrows’ monthly payments in half, allow many borrows to make 0 monthly payments, save all other borrows at least $1,000 a year and ensure that borrows’ don’t see their balances grow from unpaid interest.”
And a:
“new initial “on-ramp” grace period will stop the harshest aspects of loan payment delinquency”
Also, according to whitehouse.gov concerning the topic of President Joe Biden SAVE Plan, it stated the following:
“For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.”
“Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment under this plan.”
“Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.”
“Not charge borrowers with unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.”
For many people this is outstanding news. But there is a caveat that we must not ignore and that’s the people who will manipulate the system. What we mean by this is that there are a couple of benefits that people will take advantage of by manipulating their earnings – purposely earning less. These soon to become loopholes are as follows:
“a single borrower who makes less than $15 an hour will not have to make any student loans debt payments. According to the U.S. Department of Education: “borrowers will see their total payments per dollar borrowed fall by 40% under the new plan. And payments per dollar will drop 83% for those with the lowest projected lifetime earnings, but those with the highest projected earnings would see 5% reductions.”
Something else to be noted from whitehouse.gov is that:
“Under the new plan, the amount of income protected from payments on the SAVE Plan will rise from 150% to 225% of the Federal Poverty Guidelines, meaning that a family of four who earns less than $67,500 a year would not be required to make payments.”
Future loopholes or not, the one benefit that is missing is the fact that it does nothing to solve the large proportion of Military Veterans no matter the discharge status with student loan debt. In fact, as of 2021, close to 30% or 320,000 military veterans have student loan debt with more than 11% in default. This is something to think about and executive actions should be taken to rectify this growing issue.
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