SAVE Repayment Plan
General
On July 14, 2023, the federal government put forth this proposal for the Saving on a Valuable Education (SAVE) Income Driven Repayment (IDR) plan.
The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.
Under the SAVE Plan:
- The income exemption increases from 150% to 225% of the poverty line.
- Monthly loan payments are set at 10% of discretionary income.
- Borrowers whose income is at less than 225% of the poverty line won’t need to make monthly payments.
- Interest on loans will not accrue as long as monthly payments are being made.
- Borrowers whose original balance was $12,000 or less will receive forgiveness after 10 years (120 payments). All undergraduate loans will be forgiven in 20 years (240 payments) and all graduate loans will be forgiven in 25 years (300 payments).
SAVE went into effect in August 2023. On July 1, 2024, the repayment requirement on undergraduate loans dropped from 10% to 5% of discretionary income.
SAVE Plan FAQs
The following loans are eligible for the SAVE Plan*:
- Direct subsidized loans (undergraduate)
- Direct unsubsidized loans (undergraduate)
- Direct unsubsidized loans (graduate)
- Graduate Plus loans
Parent Plus loans ARE NOT eligible for the SAVE Plan.
* Federal loans from the FFEL Program must first be consolidated into a Direct Consolidation Loan to be eligible for repayment under the SAVE Plan.
Students enter repayment six months after graduating, dropping below half-time enrollment, or leaving school.
- The updated IDR application is now available and includes the option to enroll in the new SAVE plan.
- Apply now at studentaid.gov/idr.
- Students already in repayment and enrolled in the previous REPAYE Plan will automatically be enrolled in the SAVE Plan.
Ten percent (10%) of discretionary income will be owed towards loan repayment. (On July 1, 2024, the percentage dropped to 5% for undergraduate loans). “Discretionary income” is defined as income greater than 225% of the poverty line, which is based on household income and size.
Yes, borrowers with an income of less than 225% of the poverty line will receive a $0 monthly payment. The payment may be adjusted each time you recertify your IDR plan with updated income and family size information.
Students with a balance of $12,000 or less will receive loan forgiveness after ten years of payments. For each additional $1,000 borrowed above $12,000, the plan adds an additional 12 payments (the equivalent of one year).