51,000 Arkansans enrolled in latest student loan program

New graduates line up before the start of a community college commencement in East Rutherford, N.J., in this May 17, 2018 file photo. (AP/Seth Wenig)

WASHINGTON -- More than 51,000 Arkansans are enrolled in the U.S. Department of Education's newest program directed at reducing and canceling student loan debt.

The Department of Education released figures Wednesday regarding its Saving on a Valuable Education -- or SAVE -- plan, showing nearly 5.5 million borrowers are part of the program with some participants eligible for $0 monthly payments.

The department's data shows 51,3000 Arkansas residents are enrolled in the plan.

The program is another step in the Biden administration's efforts to address student loan debt. Millions of Americans resumed making regular payments in October following a three-year pause related to the coronavirus pandemic. The U.S. Supreme Court in July struck down the Biden administration's $400 billion plan to cancel and reduce student loan debts.

Around 3 million borrowers automatically entered the SAVE plan after previously enrolling in the Revised Pay-As-You-Earn -- or REPAYE -- plan, a similar income-driven repayment plan in which monthly loan payments equal 10% of one's discretionary income.

Through the SAVE Plan, borrowers are not required to make monthly payments if they earn less than 225% of the federal poverty level, which is $32,805 for single individuals. The cutoff for current plans is 150% of the federal poverty level, or $21,870.

The Department of Education estimates 2.9 million borrowers will have $0 monthly payments. While the Department of Education released congressional district and state data Wednesday, the release does not indicate how many people in each state would have these payments.

"If your salary is low, you're not going to be saddled with this debt," Education Secretary Miguel Cardona told reporters Wednesday. "Think about what that means for their families, where they can have food now [and] they can take care of the basic necessities."

Payments for other individuals with undergraduate student loans will be reduced from 10% of their discretionary income to 5% once the plan goes into full effect next July.

If a borrower has an outstanding balance of $12,000 or less and continues making payments, they will have their remaining balance canceled after 10 years instead of 20 years. The plan also prevents borrowers from being charged with unpaid monthly interest, meaning one's balance will not change as long as they continue making payments.

The Department of Education estimates these borrowers will save $1,224 a year compared to REPAYE plan enrollees.

"This plan is a game-changer for millions of Americans," said Neera Tanden, the domestic policy adviser to Biden. "Too many have put off having children, buying their first home, starting a business just because of the incredible debt that they're under, and that is flat-out wrong."

Cardona pitched the SAVE plan as "the first real student loan safety net in this country."

"We have to fix a broken system, and that's what we're doing," the secretary said.

More than 60 congressional Republicans sent Cardona a letter in February demanding the Department of Education cancel the program, describing the then-proposal as "reckless, fiscally irresponsible, and blatantly illegal." Arkansas' senators, Republicans John Boozman of Rogers and Tom Cotton of Little Rock, and Rep. Rick Crawford of Jonesboro, were among the signees.