In August of 2023, the Biden Administration announced the Saving on a Valuable Education (SAVE) plan, a new income-driven repayment (IDR) plan that calculates borrowers’ monthly payments on income and family size. SAVE, which replaced the Revised Pay As You Earn (REPAYE) plan, is mindful of households, like ALICE, that are struggling to make ends meet and are burdened by educational loans.
The Department of Education estimates that more than 1 million low-income borrowers will qualify for a $0 payment, allowing households to focus on more pressing expenditures. Many borrowers who earn above 225% of the FPL, and are required to make a monthly payment, will likely save around $1,000 a year on payments in comparison to other IDR plans. In addition to lowered monthly payments, borrowers can expect to see multiple new benefits including the potential to not accrue additional interest on loans. This benefit can be utilized if a borrower’s payment is made but is not enough to cover the accrued monthly interest.
Additional benefits will go into effect in July 2024 and can be read about in depth at the link below. Do you have existing federal loans? Consider applying for SAVE today.