Savings Opportunity and Affordable Repayment Act
- Sponsor
- Rep. DeLauro, Rosa L. [D-CT-3]
- Committees
- Education and Workforce Committee (primary)
- Last action
- Apr 23, 2026
Bottom line
The bill aims to substantially reduce monthly student loan payments and accelerate loan forgiveness for many borrowers by introducing a more generous income-driven repayment plan and simplifying the existing options.
What it actually does
This bill establishes a new income-contingent student loan repayment plan called the "Savings Opportunity and Affordable Repayment plan" (SOAR) under the Higher Education Act of 1965. It significantly modifies how monthly payments are calculated, caps interest accrual, and provides for earlier loan forgiveness for certain borrowers. Concurrently, it phases out the existing Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans, streamlining the federal student loan repayment landscape.
Proponents argue
Proponents argue that the SOAR plan will make higher education more affordable and accessible by providing a clearer, more generous path to manageable loan payments and eventual forgiveness, thereby alleviating the burden of student debt on millions of Americans and stimulating economic growth. They contend it simplifies the complex array of existing income-driven plans, addressing past administrative failures and borrower confusion.
Opponents contend
Opponents might argue that such a plan could significantly increase the federal deficit by reducing loan repayments and increasing forgiveness, shifting the cost burden to taxpayers. They may also raise concerns about moral hazard, potentially encouraging students to borrow more without fully considering repayment obligations, and question the fairness to borrowers who have already paid off their loans under less generous terms.
The bill is moderately complex due to its technical amendments to existing law and detailed payment calculations, requiring careful reading to grasp its full implications.
Section 2(a)(1), (2), (3), (4) amending sections 428(b)(9)(A), 428C(c)(2)(A), 455(d), and inserting new section 493E.
Creation of the Savings Opportunity and Affordable Repayment (SOAR) Plan
This provision establishes the SOAR plan as a new income-contingent repayment option for eligible federal student loans. It integrates SOAR into existing frameworks for federal direct loans and guaranteed student loans, making it available to a broad range of borrowers. This new plan is designed to offer more favorable terms than previous income-driven repayment options, aiming to simplify the repayment process and reduce financial burden.
Supporters argue
Supporters argue that creating a new, more accessible income-driven repayment plan will simplify the current confusing system and provide a clear path to debt relief for struggling borrowers, ultimately improving financial stability for millions.
Critics contend
Critics might argue that adding another repayment plan, even if intended to simplify, could initially add to borrower confusion during the transition period as borrowers navigate new rules and options.
Tradeoffs
The bill balances the desire for a simplified, more generous repayment system with the potential for initial administrative complexity during its rollout and the need for extensive borrower education.
Section 493E(a)(2)
Revised Income-Based Monthly Payment Calculation
The SOAR plan calculates monthly payments based on a borrower's adjusted gross income (AGI) relative to 250% of the poverty line. Payments are $0 for income below this threshold. For income above it, payments are 5% of discretionary income for undergraduate loans and 10% for other eligible loans (e.g., graduate loans), prorated by the loan balance. Minimal payments are set at $0 or $10 for very low calculated amounts, ensuring affordability for the lowest earners.
Section 493E(b)(2), (3), (4)
Interest Subsidy and Principal Payment Structure
Under SOAR, 50% of a borrower's monthly payment goes directly to outstanding principal, and the other 50% covers accrued charges, collection costs, interest, and then any remaining principal. Crucially, any accrued interest not covered by the borrower's monthly payment is not charged to the borrower's account, preventing loan balances from growing due to unpaid interest. Any principal due and not paid is deferred.
Section 493E(b)(5)
Accelerated Loan Forgiveness
The bill provides for loan cancellation after 120 monthly payments (10 years) for borrowers repaying only eligible undergraduate loans (specifically, those for programs not more than 2 years, or consolidation loans of such). For all other eligible loans, cancellation occurs after 180 monthly payments (15 years). This significantly reduces the repayment period compared to the 20 or 25 years typically found in other income-driven plans, offering a faster path to debt freedom.
Section 493E(b)(6)
Broadened Eligibility for Forgiveness Payment Counts
This provision broadly defines what counts as a "monthly payment or the equivalent" towards loan forgiveness. It includes months with a required payment (even $0 payments), various types of deferments and forbearances (e.g., cancer treatment, unemployment, military service, economic hardship, administrative), and payments made under other income-driven plans or standard repayment plans. It also allows for additional payments during certain deferments/forbearances to count, ensuring more periods contribute to the forgiveness timeline.
Section 2(a)(3)(B) amending section 455(d) by adding paragraph (6)
Transition and Restriction of Existing Income-Driven Repayment Plans
The bill phases out the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans. New borrowers will not be able to enroll in PAYE after two years from enactment, and existing PAYE borrowers can only continue if they meet specific hardship criteria. ICR will also be restricted, though it retains eligibility for PLUS loans made on behalf of dependent students and consolidation loans including such. Borrowers who switch out of these plans after the phase-out date cannot re-enroll.
While the bill generally phases out the ICR plan, it explicitly maintains its eligibility for Federal Direct PLUS Loans made on behalf of dependent students (Parent PLUS loans) and consolidation loans that include such PLUS loans. This is significant because Parent PLUS loans are typically not eligible for other income-driven repayment plans like SOAR directly, only through consolidation into an ICR-eligible Direct Consolidation Loan.
Section 2(a)(3)(B) adding section 455(d)(6)(B)(iii)
Why it matters:This is standard legislative practice to specify exceptions or carve-outs within broader policy changes. It ensures a specific loan type retains a particular repayment pathway that would otherwise be lost, addressing a unique borrower need.
Case for: Proponents would argue that this carve-out ensures that parents who take out PLUS loans for their children still have an income-driven repayment option, which is crucial given that these borrowers are often older and may have fixed incomes or be closer to retirement.
Case against: Critics might argue that maintaining a separate, older plan for a specific loan type undermines the stated goal of streamlining and simplifying the repayment landscape, potentially leading to continued complexity and confusion for some borrowers.
Estimated impact: Ensures an income-driven repayment path remains available for Parent PLUS borrowers, who otherwise have limited options, potentially affecting hundreds of thousands of parents.
The Secretary is mandated to track a borrower's progress toward loan cancellation under SOAR and cancel loans that meet the criteria without the need for an application or documentation from the borrower.
Section 493E(c)(4)(J)
Why it matters:This is a technical administrative detail that significantly impacts borrower experience but is not a core policy change like payment calculation or forgiveness timelines. Its placement is typical for operational instructions within legislation.
Case for: Proponents would argue this is a crucial administrative improvement that reduces borrower burden, prevents errors, and ensures eligible borrowers receive forgiveness automatically, addressing a major pain point and source of frustration in previous IDR programs.
Case against: Critics might raise concerns about the administrative capacity of the Department of Education to accurately track and automatically forgive loans for millions of borrowers, especially given past challenges with IDR program administration and data system limitations.
Estimated impact: Potentially streamlines the forgiveness process for millions of borrowers, reducing administrative hurdles and increasing access to earned relief, thereby improving borrower trust and program efficiency.