The effort to boost enrollment in the income-driven repayment program comes as student loan payments resume for the first time since March 2020.
President Joe Biden on Tuesday launched a promotional blitz for his new program that helps student loan borrowers repay their debt, just weeks before millions of Americans are set to receive a loan bill for the first time since the beginning of the pandemic.
The Biden administration is mobilizing to convince borrowers across the country to sign up for the new income-driven repayment program — dubbed the “SAVE plan” — which caps interest accrual and lowers the monthly payment amount for many borrowers.
“It’s the most affordable student loan plan ever,” Biden said in a video released by the White House on Tuesday, describing the program as a major reform to a student loan system “that hurt borrowers for much too long.”
“If you’re eligible for the SAVE Plan, sign up now so you can lower your monthly payments in advance of payments resuming this fall,” Biden said.
As part of the outreach campaign, the Education Department plans to communicate directly with nearly 30 million borrowers about the repayment program. And the administration is also enlisting the help of several outside groups: Civic Nation, the NAACP, the National Urban League, Rise, the Student Debt Crisis Center, UnidosUS and Young Invincibles.
Those groups have committed to holding in-person and virtual briefings and town halls, hosting phone banks, and running social media campaigns to promote the repayment program in the coming weeks, officials said.
The effort to boost enrollment in the income-driven repayment program comes as the Biden administration faces the unprecedented task of turning on loan payments for the first time since March 2020.
Interest will resume on federal student loans Sept. 1, and the Education Department will begin collecting monthly payments from borrowers in October.
Some economic analysts have warned that the restart of student loan payments will be a drag on consumer spending and potentially chip away at economic growth. The political stakes for the Biden administration are also high.
The White House is trying to sell borrowers on a new program to repay their debt as it separately works on a “Plan B” to cancel student debt outright in the wake of the Supreme Court in June striking down Biden’s first attempt at a mass debt relief program. That alternative program is expected to take months, if not longer, to be finalized.
Administration officials in the meantime are pitching the new repayment program as a way to help borrowers better manage the resumption of payments this fall.
“This plan is a game-changer for millions of Americans, many of whom are putting off having children, buying their first home, or even starting a business because they can’t get out from under their student loans,” said Neera Tanden, director of the White House Domestic Policy Council. “Student loans will be manageable.”
The Education Department said that the online application for borrowers was officially live on its website, StudentAid.gov, though the agency has been accepting applications since earlier this month as part of a “beta” testing period.
But some of the elements of the program, including those that Biden touted in his video on Tuesday, have not been implemented by the Education Department yet. For example, a key part of the program — cutting in half the monthly payments that undergraduate borrowers must make — won’t be available to borrowers until next summer, well after payments are scheduled resume.
Senior administration officials told reporters on Monday that borrowers who apply for the new program “in the coming days” should expect to have their applications processed by the time their monthly payments resume in October. But they did not offer any concrete cutoff date by which borrowers must apply.
While the Education Department accepts applications for the program, it’s up to the agency’s contracted loan servicers to process the paperwork and actually adjust borrowers’ monthly payments.
The department expects servicers to process applications within “about four weeks” after they are received, one administration officials told reporters.
Scott Buchanan, executive director of the Student Loan Servicing Alliance, the trade group representing student loan servicers, said that timeline was potentially feasible but dependent on the volume of applications received.
“I don’t think four weeks is unrealistic if there’s a steady stream of volume,” he said. “If there are huge spikes or an incredible amount of people who enroll, that could delay things.”
The new repayment plan also faces stiff opposition from congressional Republicans, who have blasted the policy as a backdoor loan forgiveness program that provides wasteful subsidies to millions of borrowers at taxpayer expense.
Sen. Bill Cassidy, the top Republican on the Senate education committee, plans to introduce legislation to repeal Biden’s new income-driven repayment program when Congress returns in September, a spokesperson confirmed to POLITICO.
The resolution under the Congressional Review Act would allow Republicans to force a vote on the measure in the Democrat-controlled Senate.
“After dragging their feet to formally submit the rule to Congress the administration is now rushing to implement this reckless plan to shift student debt onto taxpayers who chose not to go to college, or already paid off their loans,” Ty Bofferding, the committee spokesperson, said in a statement.
Rep. Virginia Foxx, the chair of the House education committee, also plans to move forward with a companion resolution to overturn Biden’s repayment program in the House, according to a spokesperson.
A similar GOP-led effort to repeal Biden’s student debt relief program earlier this year, before the Supreme Court ruling, passed Congress with a handful of Democratic votes, though Biden swiftly vetoed the measure.