Sponsors (18)
The bill expands access to income-driven repayment, caps payments, accelerates principal reduction, and cancels remaining balances after long-term repayment—providing significant debt relief for many—while narrowing some plan choices for future borrowers and adding verification and documentation requirements that can cause loss of benefits and higher payments if missed.
Borrowers with eligible federal undergraduate or mixed loans: after long-term repayment (120 months for undergraduate-only borrowers; 180 months/≥15 years for others) any remaining federal loan balance will be canceled, reducing or eliminating long-term student debt.
Low-income borrowers (AGI ≤ 250% of poverty): will have $0 monthly payments under SOAR, substantially reducing near-term cash flow burdens for low- and moderate-income households.
Borrowers enrolled in SOAR: monthly payments are capped by the SOAR formula (including 5%/10% bands and proration rules) and at least half of each required payment is applied to principal, which accelerates principal reduction and limits long-term interest growth.
Borrowers who miss or are late providing required documentation: risk removal from SOAR and being placed on a 10-year standard repayment schedule, which can substantially raise monthly payments and reduce chances of eventual forgiveness.
Borrowers and taxpayers: the requirement to disclose tax data (or provide alternate documentation) and undergo annual verification increases administrative burden and raises privacy and data-security concerns.
Future borrowers/new enrollees: phasing out PAYE and ICR for new enrollments after two years reduces repayment plan choice and flexibility for future borrowers and for those who might want to switch plans.
Based on analysis of 2 sections of legislative text.
Adds a new SOAR income-contingent repayment plan, expands ICR eligibility for certain PLUS/consolidation loans, and phases out PAYE and ICR enrollment for new entrants after two years.
Official title: Amend the Higher Education Act of 1965 to provide for a Savings Opportunity and Affordable Repayment plan as an income contingent repayment plan.
Introduced April 1, 2025 by Jeff Merkley · Last progress April 1, 2025
Creates a new income-contingent repayment option for federal student loans called the Savings Opportunity and Affordable Repayment (SOAR) plan and requires federal income-driven repayment offerings to include that plan. It also phases out two existing income-driven plans (Pay As You Earn and Income-Contingent Repayment) to new entrants after two years while preserving certain existing borrowers' access and expands eligibility for ICR to explicitly include certain Federal Direct PLUS and consolidation loans for dependent students. Key timing rules: the requirement to include the SOAR plan takes effect 180 days after enactment; the PAYE and ICR phase-out rules apply two years after enactment, with limited grandfathering for borrowers already enrolled or meeting prior eligibility rules.