WASHINGTON — The Biden administration calls it a “student loan safety net.” Opponents call it a backdoor attempt to make college free. And it could be the next battleground in the legal fight over student loan relief.
to cancel debt and also shifted attention to the lesser-known initiative, calling it “the most affordable repayment plan ever.” The typical borrower who enrolls in the plan will save $1,000 a month, he said. Emboldened by the Supreme Court's decision on cancellation, some opponents say it’s a matter of time before the repayment plan also faces a legal challenge.The U.S. Education Department offers several plans for repaying federal student loans. Under the standard plan, borrowers are charged a fixed monthly amount that ensures all their debt will be repaid after 10 years.
Next July will also bring a quicker road to loan forgiveness. Starting then, borrowers with initial balances of $12,000 or less will get the remainder of their loans canceled after 10 years of payments. For each $1,000 borrowed beyond that, the cancellation will come after an additional year of payments.
Opponents call it an unfair perk for those who don't need it, saying it passes a heavy cost onto taxpayers who already repaid student loans or didn’t go to college. Some worry that it will give colleges incentive to raise tuition prices higher since they know many students will get their loans canceled later.