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Introducing the Enhanced SAVE Repayment Plan: Lighter Financial Load, Easier Qualification

The world of student loan repayment became brighter with the launch of the Savings on a Valuable Education (SAVE) Plan. Building upon the foundation of the former Revised Pay As You Earn (REPAYE) Plan, the SAVE Plan brings a fresh perspective to ease the financial burden of student borrowers. Current REPAYE Plan holders will automatically transition to the new SAVE Plan, unlocking its benefits.

Reduced Monthly Payments with the SAVE Plan

Key Benefits of the SAVE Plan

The SAVE Plan, an income-driven repayment (IDR) option, expertly calculates your monthly payments based on your income and family size. Notably, it offers the most affordable monthly payments among all IDR plans, available to nearly all student borrowers.

The forthcoming summer brings several impactful changes to the SAVE Plan, with more enhancements planned for 2024.

  1. Expanded Income Exemption: The income exemption threshold leaps from 150% to 225% of the poverty line. This increase significantly reduces your monthly payment compared to other income-driven repayment plans.
  2. Interest Elimination: Under the SAVE Plan, a scheduled payment clears 100% of the remaining interest on subsidized and unsubsidized loans. This ensures your loan balance remains unaffected by unpaid interest. Imagine a scenario where your monthly payment is $30, and $50 in interest accrues – with the SAVE Plan, that remaining $20 is waived.
  3. Streamlined Spousal Income Exclusion: If you’re married and filing separately, the SAVE Plan doesn’t consider your spouse’s income, eliminating the need for them to co-sign your IDR application.

More: Major Student Loan Forgiveness Program Launched, A Lifeline for Borrowers

Applying for the SAVE Plan

The eagerly anticipated SAVE Plan is now accessible through a beta version of the updated IDR application. Enroll early to help us fine-tune our processes before the official launch. If you’ve already enrolled in REPAYE or recently applied, no worries! You’ll automatically transition to the SAVE Plan without the need for reapplication. An email confirmation will follow your application.

Steps to Apply:

  1. Access the IDR application.
  2. Opt for your loan servicer to place you on the lowest monthly payment plan, often the SAVE Plan.

Transitioning from Another IDR Plan

For those already on an IDR plan, particularly the REPAYE Plan, you’ll be effortlessly moved to the SAVE Plan during the summer transition. Verify your plan status on If you’re on a different repayment plan, consider switching to REPAYE now to reap the SAVE Plan’s benefits when available.

More: Choosing the Right Federal Student Loan Repayment Plan: A Comprehensive Guide

Monthly Payment Details

Starting this summer, if your yearly income is $32,800 or less (approximately $15 per hour), your monthly payment is a remarkable $0. For those earning more, the SAVE Plan guarantees annual savings of at least $1,000 compared to other IDR plans. And looking ahead to the following summer, undergraduate loan payments for SAVE Plan participants will be halved, dropping from 10% to 5% of income above 225% of the poverty line. Borrowers with both undergraduate and graduate loans will enjoy a weighted average payment ranging from 5% to 10% of their income based on the original principal balances of their loans.

Transition to the SAVE Plan today and experience a brighter financial future while pursuing your valuable education.

More: How Income-Driven Repayment Plans Can Help You Manage Your Student Loan Payments

Changes to Income-Driven Repayment Process

There are significant improvements to the income-driven repayment (IDR) application and process this upcoming summer. Here’s a breakdown of the changes you can expect:

1. Streamlined Access to Tax Information We’re introducing a new integration with the IRS, allowing you to grant secure access to your latest tax return when applying for or recertifying your IDR plan. This eliminates the need to manually input income and family size information during the initial application or recertification, saving you valuable time.

2. Automatic Recertification By consenting to the secure disclosure of your tax information, the Department of Education and your loan servicer will automatically recertify your enrollment in the IDR plan once a year. This process will adjust your monthly payment amount accordingly. You’ll receive notifications about any payment changes, and you still have the option to recertify your plan if needed manually.

3. Interest Capitalization Changes Starting from July 1, when you leave most IDR plans, unpaid interest on your loans won’t be added to your principal. This change excludes the Income-Based Repayment (IBR) Plan, where statute requires capitalization.

4. Redesigned Application The new application has been redesigned for efficiency. It can be completed in under 10 minutes, with the ability to save your progress and track your application through your account.

5. SAVE Plan Benefits The SAVE Plan is introducing additional benefits effective from July 2024, aimed at further reducing payments and enhancing repayment management. The key benefits include:

  • 50% Reduction in Undergraduate Loan Payments: Payments on undergraduate loans will be halved, going from 10% to 5% of income above 225% of the poverty line.
  • Forgiveness Based on Principal Balance: Borrowers with original principal balances of $12,000 or less will receive forgiveness after 10 years of payments. The maximum forgiveness period increases by one year for every additional $1,000 borrowed.
  • Consolidation Benefits: Borrowers who consolidate won’t lose progress toward forgiveness. They’ll receive credit based on the principal balance of the consolidated loans.
  • Automatic Credit for Deferment and Forbearance Periods: Borrowers will automatically receive credit toward forgiveness for certain periods of deferment and forbearance, with the option to make additional “catch-up” payments.
  • Automatic Enrollment in IDR for Late Payments: Borrowers 75 days late will be automatically enrolled in IDR if they’ve agreed to allow secure access to their tax information.

6. Monthly Payment of $0 IDR plans ensure minimum income protection to cover necessities. If your household income falls below this level, you’ll have a $0 monthly payment. This amount can change each time you recertify your IDR plan with updated income and family size information.

7. Timely Application Processing If you apply for the SAVE Plan or another IDR plan this summer, your application will be processed in time for your first payment due date in October. Please note that your servicer might take a few weeks to process your request as they need to verify your income and family size documentation.

These changes are designed to simplify and enhance your experience with income-driven repayment plans, making managing your student loan payments more manageable.

More: Start Planning for Repayment and Explore Available Options | Student Loan Repayment Guide

Questions Answered in this Article

Q1: What is the Enhanced SAVE Repayment Plan and how does it differ from the former REPAYE Plan? A1: The Enhanced SAVE Repayment Plan replaces the former REPAYE Plan, offering a lighter financial burden for student borrowers. It reduces monthly payments based on income and family size, with a higher income exemption threshold of 225% of the poverty line.

Q2: What are the key benefits of the SAVE Plan? A2: The SAVE Plan offers several benefits, including a 50% reduction in undergraduate loan payments, interest elimination on subsidized and unsubsidized loans, streamlined spousal income exclusion, consolidation benefits, and automatic credit for specific deferment and forbearance periods.

Q3: Should current REPAYE Plan holders reapply for the SAVE Plan? A3: No, current REPAYE Plan holders will automatically transition to the new SAVE Plan without needing reapplication. An email confirmation will follow the application.

Q4: How does the SAVE Plan simplify the application process? A4: The updated IDR application for the SAVE Plan can be completed in under 10 minutes, with the ability to save progress and track the application through the account.

Q5: What is the income threshold for a $0 monthly payment under the SAVE Plan? A5: If your yearly income is $32,800 or less (approximately $15 per hour), you’ll have a $0 monthly payment under the SAVE Plan. This amount can change each time you recertify your IDR plan with updated income and family size information.

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