Savings Opportunity and Affordable Repayment Act
- Bill Number
- H.R. 8475
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Education
- Status
- Introduced
- Latest Action
- 2026-04-23: Referred to the House Committee on Education and Workforce.
- Last Updated
- 2026-05-21T08:08:00Z
AI-Generated Summary
Purpose
The Savings Opportunity and Affordable Repayment Act (H.R. 8475) amends the Higher Education Act of 1965 to create a new income-contingent repayment plan called the "Savings Opportunity and Affordable Repayment plan" (SOAR plan). This plan aims to make federal student loan payments more affordable based on a borrower's income, while providing pathways to loan forgiveness after set periods.
Key Provisions
- Eligible Loans: Applies to loans under Federal Family Education Loan (FFEL) Program (Part B) or William D. Ford Federal Direct Loan Program (Part D).
- Monthly Payment Calculation (based on adjusted gross income, or AGI, and family size):
- $0 if AGI is at or below 250% of the federal poverty line.
- 5% of income above 250% poverty line for undergraduate loans (prorated by original undergrad balance).
- 10% of income above 250% poverty line for other loans (prorated by remaining balance).
- Minimums: $0 if under $5; $10 if $5–$9.99.
- Includes spouse's AGI if filing jointly (with adjustments if spouse has loans).
- Payment Application: 50% of payment reduces principal directly; remaining 50% covers fees, interest, then principal. Unpaid interest does not accrue or capitalize.
- Loan Forgiveness:
- After 120 qualifying payments (10 years) for undergraduate loans from ≤2-year programs.
- After 180 qualifying payments (15 years) for all other eligible loans.
- Qualifying Payments: Includes on-time payments, $0 payments, certain deferments/forbearances (e.g., economic hardship, military, unemployment), and payments under other plans.
- Flexibility: Borrowers can make multiple/lump-sum payments, switch to other plans, or request recalculations for life changes.
- Administration: Department of Education verifies income annually via IRS data or borrower documents; automatic tracking for forgiveness; fallback to 10-year standard plan if documentation fails.
Significant Changes to Existing Law
- Adds SOAR as a new income-contingent option available 180 days after enactment.
- Phases Out Older Plans (after 2 years):
- Pay As You Earn (PAYE): Limited to current enrollees with partial financial hardship; no new or re-enrollments.
- Income-Contingent Repayment (ICR): Restricted similarly; expands eligibility to some parent PLUS loans for dependent students.
- Updates FFEL, Direct Loans, and consolidation rules to incorporate SOAR.
- Shortens forgiveness timelines compared to some existing plans (e.g., 20–25 years under prior ICR).
Potential Impacts
- Borrowers: Lower payments for low/moderate-income individuals; faster forgiveness reduces lifetime debt burden; simplifies choices by phasing out complex plans.
- Government Agencies: Increases administrative workload for Department of Education (income verification, tracking); potential rise in forgiveness costs to taxpayers.
- Citizens: May lower default rates, improve financial stability for millions with student debt; no direct international effects.
- Loan Servicers: Must implement new payment rules and 50/50 split.
Main Stakeholders
- Student Loan Borrowers: Primarily undergraduate and low/mid-income repayment participants.
- Department of Education: Oversees implementation and forgiveness.
- Loan Servicers: Handle payments and compliance.
- Taxpayers: Fund forgiven amounts and program costs.
- Higher Education Institutions: Indirectly affected via borrower affordability.
Notable Legal, Constitutional, or Political Implications
- Legal: Requires regulatory updates (e.g., to 34 CFR §685.209); mandates IRS data-sharing with borrower consent; automatic forgiveness without applications streamlines process.
- Constitutional: No apparent challenges; operates within Congress's spending power for education aid.
- Political: Simplifies repayment amid ongoing student debt debates; phase-out of existing plans may spark controversy over access to prior options; cost estimates could influence budget discussions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. DeLauro, Rosa L. [D-CT-3]
Cosponsors (10)
Rep. Simon, Lateefah [D-CA-12], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Pingree, Chellie [D-ME-1], Rep. Thanedar, Shri [D-MI-13], Rep. Casar, Greg [D-TX-35], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Jayapal, Pramila [D-WA-7], Rep. Goldman, Daniel S. [D-NY-10], Rep. Craig, Angie [D-MN-2], Rep. Grijalva, Adelita S. [D-AZ-7]
Recent Actions
- 2026-04-23: Referred to the House Committee on Education and Workforce.
- 2026-04-23: Introduced in House
- 2026-04-23: Introduced in House
Bill Versions
- Savings Opportunity and Affordable Repayment Act — issued 2026-04-23 — PDF (24 pages)