Biden's unconstitutional free ride for student loan borrowers ends August 1

[Hol]

In an announcement video posted to X, Department of Education Secretary Linda McMahon announced that beginning August 1, the Department of Education will resume charging interest on student loans under the Saving on a Valuable Education (SAVE) Plan enacted under former President Joe Biden. That plan was ruled an unconstitutional overreach of power by the United States Supreme Court in June 2023.

The Biden administration introduced the SAVE Plan in the summer of 2023 and billed it as an affordable repayment program, but it was legally challenged and is now defunct. Critics argued in editorials that it was "straight up buying votes" and a blatant attempt to buy votes for the Democratic Party.

This change marks a broader overhaul of the federal student loan system under President Trump's administration, which will phase out the SAVE Plan and other income-driven repayment plans that claimed to eliminate or lower payments for borrowers, but in practice handed the bill to American taxpayers.

The Trump administration's view on the issue is that loan cancellations are "vile" and are not a viable option as it merely shifts debts from one party to another, specifically not allowing American taxpayers to take on debts that are not their own.

Biden's unconstitutional free ride for student loan borrowers ends August 1

Teaching students fiscal responsibility: The new guardrails rein in Biden-era student loan cancellation, reduces federal spending on loan forgiveness, and imposes stricter borrowing and repayment structures.

justthenews.com

 

[Ghoti Ichthus]

Some forgiveness/cancellation programs are continuing, specifically those for public service (PSLF), teachers, nurses, and permanently disabled.
The specific income-based repayment plan (IRB) called Saving on a Valuable Education (SAVE) is gone. People have to apply for a different IRB if they need one, and first payments are due in October.

The Department of Education student aid website says 3 days for a reply on student loan cancellation with VA documentation and it's automatic. The chatbot says 35 days and they might need additional documentation.

A lot of people with student loans continued to make payments all the way through covid and after. My loan servicer told me most people with loans serviced though them did so. Because of the blanket forbearance/suspension and 0 percent interest, this put a lot of money onto principal that otherwise would have just paid interest.

During his first term, President Trump signed an EO that said through some date in 2026, forgiven/canceled loans incurred no Federal tax liability. I haven't heard anything about what's going to happen after that.