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The SAVE Repayment Plan Explained

October 1st marked the return of student loan payments, prompting a flurry of students in search of their ideal repayment plan. There are about 43.5 million Americans who currently have student debt and are trying to pay off their loans. Recently, as of summer of 2023, a new repayment plan called SAVE has been introduced as an option with new benefits. The SAVE Plan is replacing the Revised Pay As You Earn (REPAYE) Plan.

What is the SAVE Repayment Plan? 

The Saving on a Valuable Education (SAVE) Plan is a new Income Driven (IDR) Plan. Like other Income-Driven Repayment (IDR) plans, the SAVE Plan determines your monthly payment by considering your income and the size of your family. What sets SAVE apart from other IDR plans is that it can reduce monthly payments for many borrowers. 

Three Key Features 

  • Monthly Payments Reduced 

    • Borrowers may see their payments cut in half due to new thresholds for discretional income at 225% of the federal poverty guidelines.   
  • Accelerated Loan Forgiveness 

    • Forgiveness may come sooner than other IDR plans. Borrowers that originated a loan balance of $12,000 or less could see a 10-year forgiveness instead of the typical 20 or 25 years. 
  • Elimination of Unpaid Interest 

    • The plan eliminates all remaining monthly interest after each scheduled payment meaning your loan balance will not grow due to unpaid interest. For example, your monthly payment is $50 under this SAVE plan, however you are accumulating $70 in interest (which is more than your monthly payment). On the old IDR plans, that $20 you didn’t pay as part of your monthly installment would eventually get added to your loan balance (making your loan grow larger). However, with SAVE, this $20 is now eliminated. 

These features went into effect in the summer of 2023, but more benefits will go into effect in the summer of 2024 Woman researching benefits of the SAVE Repayment Plan

Who is Eligible?  

Student loan borrowers who have eligible loan types.  

Eligible: 

  • Direct Subsidized Loans 
  • Direct Unsubsidized Loans 
  • Direct PLUS Loans made to graduate or professional students 
  • Direct Consolidation Loans that did not repay any PLUS loans made to parents 

Eligible if Consolidated into a Direct Consolidation Loan: 

  • Subsidized Federal Stafford Loans (from the FFEL Program) 
  • Unsubsidized Federal Stafford Loans (from the FFEL Program) 
  • FFEL PLUS Loans made to graduate or professional students 
  • FFEL Consolidation Loans 
  • Federal Perkins Loans 

There is no income requirement to apply and qualify for the plan. 

How to Apply for the SAVE Plan? 

To apply, the borrower must use the IDR application to apply for the SAVE plan. Borrowers who were on the REPAYE Plan have automatically been enrolled for the SAVE Plan. Sign up is now open, but the plan will not go into full effect until July 2024.  

Debt Free loading

How You Can Help Students 

Educate your students on different repayment plan options, so they know what they will owe each month and be able to afford it. 

Make sure to also check our blog on Student Loan Payments and Interest Accrual! 

Please do not hesitate to contact FAS with any questions or concerns. 

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