WASHINGTON — The Department of Education is notifying borrowers enrolled in Biden-era student loan repayment programs about changes officials say will “streamline” the system for millions of Americans.
Nicholas Kent, the under secretary of education, told The Post in an interview that roughly 7.5 million borrowers in Biden’s SAVE Plan will have a 90-day window, beginning July 1, to move out of the program.
Altogether, borrowers in the SAVE program carry about $365 billion in remaining student loan debt, an Education Department spokesperson said.
“We have over 40 repayment and discharge options currently, and the system has become overly complex and very difficult to understand,” Kent said, calling the current array of choices “a Frankenstein model.”
He said a key goal of the Working Families Tax cuts Act is to make repayment easier to follow, “so whether or not you have a certificate in pipe fitting or you have a Ph.D. in philosophy, it’s understandable and easy to navigate.”
Borrowers will be contacted in groups by their loan servicers and then given 90 days to choose between two Trump administration repayment options. The Biden administration’s repayment plans are scheduled to be fully phased out by July 1, 2028.
Kent said more than 300,000 SAVE borrowers have already moved into the Trump administration’s income-driven repayment alternative, called the Repayment Assistance Plan, or RAP.
Having millions of borrowers try to switch plans at the same time “would create sort of a bottleneck,” Kent said, adding, “and we don’t want that. We want to support borrowers.”
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“We started communicating with borrowers, earlier this year telling them that this plan is no longer an option and that they need to move to a new lawful repayment plan and so we’ve done two campaigns at the Department of Education, one this spring, one last month, and we’ll do a final one, this month before we turn it over to the servicers,” Kent added.
A federal appeals court struck down the income-driven repayment plan in March that had been projected to cost taxpayers as much as $475 billion by 2033.
RAP enrollees will have to pay between 1% and 10% of their earnings based on their adjusted gross income to meet a minimum monthly payment, and their debt will be canceled after 30 years if not fully paid.
Some borrowers in the past had griped of a negative return on investment, Education Department officials said.
“If you are a borrower in RAP and you are making your on-time payments the way that you should, you will always see your balance decline,” Kent reassured.
The other plan, known as the Tiered Standard Plan, will now extend the typical 10-year window for student debt repayment to as much as 25 years in some cases, according to Kent.
“The Biden admin did this themselves and then they get caught up in litigation, and now we have to deal with these 7 million students who I’m sure are frustrated and confused,” he also said.
“Our repayment plans are congressionally mandated, meaning that they’re not going away anytime soon, and you know, they obviously are gonna be able to withstand any judicial scrutiny that that that may come about,” Kent said.
“It’s about putting the onus back on Congress and, and less about, you know, the department just doing whatever the hell it wants.”
