By The Editorial Board
The question of student loan forgiveness is on the ballot once again. Every election year, students from colleges across the country are thinking about how their vote impacts their financial future. So, what student loan measure is on the ballot this fall?
In August 2023, the Biden administration proposed the SAVE (Saving on a Valuable Education) plan as a new effort to relieve many college students and graduates from the burden of expensive education costs.
According to U.S. News Today, educational costs have skyrocketed, increasing by 127% over the past 20 years. This is especially concerning when you consider the lack of corresponding wage growth during the same period.
The SAVE plan, as summarized by StudentAid.gov, is an Income-Driven Repayment (IDR) plan where monthly payments are based on income and family size. The plan lowers payments for almost all borrowers compared to other IDR plans, as payments are calculated using a small portion of your adjusted gross income. For example, if your annual income is equal to or less than $32,800 and you are a single filer — meaning you are unmarried or legally divorced — your monthly payment could be $0 because your discretionary income would also be $0.
Another key benefit of the SAVE plan is that it prevents unpaid interest from accumulating, meaning your loan balance won’t grow due to unpaid interest. Essentially, the plan revises earlier student loan policies, creating a stronger safety net for government loan borrowers.
For a private university like Baylor, whose tuition increased by 5.8% this year, the SAVE plan’s impact is more complicated. The plan only applies to certain eligible government loans, such as subsidized, unsubsidized or Parent PLUS loans. This means that only a portion of the total cost of attending a school like Baylor can be covered under the SAVE plan, as private loans and some loans taken out by parents don’t qualify.
Over 57% of Baylor students come from families in the upper 20% of income brackets, drawing a wealthier demographic compared to the 4.8% of students in the lower 20%. However, this could change as lower-income students are drawn to the possibility of attending Baylor with the aid of the SAVE plan. In the past, high education costs have pushed many talented, driven students to opt for local state schools or community colleges. The high cost of college often forces lower-income families to choose the most economically safe route.
The SAVE plan could open doors for more students seeking a rigorous Christian education without being overwhelmed by the cost of tuition and the financial pressures of college life. This plan could contribute to greater diversity on Baylor’s campus and allow students to focus more on their education, rather than juggling multiple jobs while attending classes.
However, the plan has its downsides. The SAVE plan’s appeal might encourage more students to borrow, increasing the risk of future debt. This can be seen evidently for those pursuing degrees that have less of a financial trade off. Also, overall student loan forgiveness and the SAVE plan have been in “congressional limbo” as lawmakers debate the future of these policies before the November election.
Every plan has its risks, but ensuring a greater financial safety net for those who need it is crucial for the future of education.
