New student loan plan offers lower payments but eliminates borrower choice

What it does

This bill creates a new federal student loan repayment plan called the Savings Opportunity and Affordable Repayment (SOAR) plan. Under SOAR, borrowers pay 0% of income up to 250% of the poverty line, then 5% of income above that threshold for undergraduate loans and 10% for graduate/other loans. Loans are forgiven after 120 payments (10 years) for undergraduate-only borrowers or 180 payments (15 years) for those with any graduate debt. The bill also phases out two older income-driven plans (PAYE and ICR) over 2 years, preventing new enrollments and re-enrollment after borrowers switch plans.

Why we flagged it

The bill's core mechanism is the creation and implementation of a new income-driven repayment plan with specific payment formulas, forgiveness timelines, and phase-out provisions for existing plans. This is straightforward student-loan policy, not a hidden rider or carve-out.

What the text implies

• Borrowers currently on PAYE or ICR who switch plans lose the ability to return, even if the new SOAR plan proves unsuitable or their circumstances change—this permanently narrows borrower optionality.
• The 250% poverty-line threshold for 0% payments is significantly higher than PAYE's 150% threshold, potentially benefiting higher-income borrowers more than the lowest-income borrowers the plan nominally targets.
• Interest accrual is capped only for SOAR borrowers; borrowers on other plans continue to accrue unpaid interest, creating a two-tier system that may incentivize rapid migration to SOAR and destabilize other repayment cohorts.
• Forgiveness after 120 payments (10 years) for undergraduates is substantially faster than existing 20–25 year timelines, but only if the borrower has no graduate debt—borrowers with even one graduate loan must wait 15 years, creating a cliff effect.
• The bill requires annual income recertification and removes borrowers from SOAR if they fail to provide documentation, placing them on a 10-year standard repayment plan—a harsh penalty that may trap low-income borrowers in unaffordable payments.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

SOAR offers genuine relief to borrowers through lower payment thresholds (250% poverty line vs. 150% under PAYE), interest accrual caps, and shorter forgiveness timelines for undergraduates (10 vs. 20–25 years). However, the phase-out of PAYE and ICR eliminates borrower choice: after 2 years, existing PAYE/ICR users cannot return to those plans even if circumstances change, and new borrowers cannot access them at all. This trade-off between lower payments and reduced plan optionality is a genuin

Named in the bill

U.S. Department of Education, Internal Revenue Service, Federal Direct Loan program, PAYE (Pay As You Earn) plan, ICR (Income Contingent Repayment) plan, Community Services Block Grant Act

Where it stands

17 cosponsors: 16 Democrats, 1 Independents.

• Apr 1, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Apr 1, 2025 — Referred to Senate Committee on Health, Education, Labor, and Pensions · Congress.gov: “Read twice and referred to the Committee on Health, Education, Labor, and Pensions”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.