The Biden Administration unveiled its Saving on a Valuable Education (SAVE) plan Tuesday morning, which aims to significantly lower payments and reduce the overall cost of loans for millions of people.
According to a press release from the White House, the SAVE plan “will cut many borrowers’ monthly payments to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest, and will get more borrowers closer to forgiveness faster.”
The plan is based on individual income and is estimated to offer some level of aid to over 20 million borrowers.
Under the loan plan, the Department of Education estimates that more than 1 million additional low-income borrowers will qualify for a $0 payment and payments on undergraduate loans will be cut in half with payments reduced from 10% to 5% of their discretionary income.
According to a 2019-2020 study by The Institute for College Access and Success, the average California college graduate had $21,125 in student debt. The same study found that 39% of Cal Poly graduates held debt graduation, and the average debt load of Cal Poly students was $22,933.
In a statement to KSBY, Cal Poly Communications Specialist Keegan Koberl clarified that "as a loan repayment plan, the SAVE plan will not impact a current Cal Poly student but can benefit them once they go into repayment at the point they graduate or stop school and anticipate going into repayment on their loans."
“The SAVE program is the next iteration of the income-derived repayment plans," added Jill Stearns, Cuesta College's superintendent/president. "For this one, the lowest-level income individuals — those making $15 an hour or less — have an opportunity to have their student loans forgiven. So that's really incredible.
"It's not so applicable in California, where it's below our minimum wage," she continued. "But there is hope for those individuals that are in the repayment process who aren't yet at their career goal to qualify. They will have some of their loans reduced."
Eric Maldonado, owner and founder of Aquila Wealth Advisors, LLC in San Luis Obispo, said that he views the SAVE plan as a potential “game changer” because of its ability to allow individuals to have “a really low payment and then extend out the time you have to pay it off, and kind of reduce the level of stress they might feel.”
Maldonado advised those who currently have student loans to avoid “consolidating before you have all of the information,” which can “eliminate the option of some of those forgiveness programs or payback programs.”
He also recommended that everyone concerned about their student loans should “do their research.”
“Go on the website that is provided by the government, try to figure out what is happening there," Maldonado said. "Don’t avoid it, don’t ignore it. Address it and read some articles and try to figure out what the options are with the SAVE program.”
“Our amazing financial aid team at Cuesta College is here to help someone navigate the application for this new program," explained Stearns. "Even if you didn't attend Cuesta College and you have questions about your student loan repayment, you can always contact us and we are happy to assist."
More information can be found on the Federal Student Aid website.
