The Beta application site for the new Saving on a Valuable Education (SAVE) Plan is now live. The SAVE Plan, like other income-driven repayment (IDR) plans, calculates your monthly payment amount based on your income and family size. The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers. The new SAVE plan replaces the existing Revised Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan will automatically get the benefits of the new SAVE Plan.
The new plan was announced shortly after SCOTUS struck down the Biden administration’s student loan forgiveness plan. The announcement indicated that the new plan will:
- For undergraduate loans, cut in half the amount that borrowers have to pay each month from 10% to 5% of discretionary income.
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment under this plan.
- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less. The Department estimates that this reform will allow nearly all community college borrowers to be debt-free within 10 years.
- Not charge borrowers with unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower’s loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
Full details on the new plan and application can be found on the Federal Student Aid website.
Directly from the website:
A beta version of the updated IDR application is now available and includes the option to enroll in the new SAVE Plan.
We’re accepting applications now to help us refine our processes ahead of the official launch. If you submit an IDR application now, it will be processed and will not need to be resubmitted. The application may be available on and off during this beta testing period. If the application is not available, try again later. You will receive an email confirmation after you have applied.
If you had already enrolled in the REPAYE Plan or recently applied, you will automatically be put on the SAVE Plan. There is no need to reapply or request to change your plan. Learn how to check which plan you’re on.
How do I apply for the SAVE Plan?
Use the IDR application to apply for the SAVE Plan now. You can select the option for your loan servicer to place you on the lowest monthly payment plan (this will usually be SAVE).
SOURCE: SAVE Repayment Plan Offers Lower Monthly Loan Payments