STEVE INSKEEP, HOST:
Millions of student loan borrowers likely face a change this year. They will probably have to resume making payments on their loans as President-elect Trump returns to the White House. NPR education correspondent Cory Turner is here. Good morning.
CORY TURNER, BYLINE: Good morning, Steve.
INSKEEP: I guess we should start with - why is it that the borrowers have not been making payments right now?
TURNER: Yeah. It is because these roughly 8 million people we're talking about have been enrolled in the Biden administration's new repayment plan, known as SAVE. It is by far the most flexible repayment plan out there. It's based on a borrower's income. So the less you make, Steve, the less you're ultimately going to have to pay back...
INSKEEP: Got it.
TURNER: ...Because of Bolton (ph) loan forgiveness. Also, interest is no longer allowed to balloon a loan, and monthly payments for most borrowers on SAVE are going to be far lower than on any other plan. And the reason borrowers haven't had to make payments is that a bunch of Republican state attorneys general sued the Biden administration over SAVE, and the courts have frozen it until they can determine if it's legal.
INSKEEP: What is the legal challenge to this program?
TURNER: Well, essentially, it boils down to this idea of - it's government 101 - Congress - only Congress can greenlight a program that spends taxpayer dollars. And these Republican state attorneys general argue SAVE is expensive. This is not the province of the executive branch. One estimate said SAVE, with all its flexibility, could cost taxpayers around $450 billion over 10 years.
But the case is tricky because, technically, many years ago, Congress did say the President is allowed to create new repayment plans. In fact, other administrations have done this very thing without legal fights. The problem with SAVE is that it is so much bigger, Steve, and more expensive than anything we've seen before. Here's Jason Delisle at the Urban Institute.
JASON DELISLE: The courts have had this saying for a long time - right? - which is that Congress doesn't hide elephants in mouse holes, which is the better way of saying, if Congress meant you to do something big, executive branch, they would have been really clear about it.
TURNER: And with the potential price tag approaching half a trillion dollars, it's hard to argue SAVE is not an elephant.
INSKEEP: OK, so that court case is going forward. The administrations are changing. What do borrowers need to know now?
TURNER: Well, the first thing is that, even if the courts do uphold SAVE, there are other ways the incoming Trump administration or the Republican-held Congress can change it. And if or when that day comes, many borrowers should be prepared for higher monthly payments. I was talking with Carolina Rodriguez. She's director of the Education Debt Consumer Assistance Program in New York. Basically, her whole job is helping borrowers navigate their student loan problems. She told me 2025 is going to be a wake-up call for many borrowers, and she's worried for those who haven't been paying attention.
CAROLINA RODRIGUEZ: It is catastrophic. Once collection activities resume, once people actually don't take any action, they're going to be in default, right? Like, they could see their wages garnished. If they're getting a tax refund, that will be intercepted.
INSKEEP: So what could borrowers do now?
TURNER: Rodriguez told me she's telling borrowers to check back in with their loans and consider the alternatives to SAVE. There's a plan called IBR for income-based repayment. It has built-in forgiveness and has avoided lawsuits because it was clearly created by Congress. The Ed Department also recently reopened to older repayment plans, though a broad court ruling against SAVE could affect those as well, Steve.
INSKEEP: NPR's Cory Turner - thanks so much.
TURNER: You're welcome. Transcript provided by NPR, Copyright NPR.
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