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How to Know If You’re Eligible for Biden’s SAVE Student Loan Repayment Plan

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Updated: | Originally published:

The Biden Administration officially launched their new student loan plan on Tuesday, detailing what it calls the “most affordable repayment plan ever” for student loan borrowers.

The Saving on a Valuable Education (SAVE) plan, which the White House initially announced on June 30, is replacing the existing Revised Pay-As-You-Earn (REPAYE) plan. This program and the three other existing income-driven repayment plans, which provide borrowers with lower monthly payments that are tailored to their income and family size, will remain in place. Income-driven repayment plans may be appealing to some because borrowers will have their loan balance automatically forgiven after 20 or 25 years of payments, depending on the type of loan they took out.

The SAVE plan could cut payments on undergraduate loans by half compared to the other income-driven repayment plans. The new program was finalized on June 30 after the Supreme Court struck down Biden’s earlier student-loan relief plan

“Today I’m proud to announce a new program called the SAVE Plan,” President Biden said during the program video launch on Tuesday. “Here’s how it works. To pay back [a student] loan, you had to pay 10% of your discretionary income. That’s all the income available to you after you pay for food, housing, and all your basic needs. Under my new plan, we’re reducing that payment to just 5% of your disposable income. That’s going to save the typical borrower around $1,000 a year.”

Applicants can now enroll in the SAVE plan by visiting the student aid website. Federal student loan payments are expected to start again on October 1. 

Here’s what to know about the SAVE plan.

Are you eligible?

The SAVE plan is ideal for borrowers who are looking to make changes to their current repayment plan, or are not currently enrolled in an income-driven repayment plan and are looking to decrease their monthly payments for student loans. 

Borrowers who were enrolled in the REPAYE plan will automatically be enrolled in the SAVE plan. Borrowers with parent PLUS loans must consolidate their loans before they can apply for an income-driven repayment plan. 

The Department of Education says that borrowers who make less than $15 an hour and are enrolled in SAVE will have a $0 monthly payment on their student loans. That is because the way the Education Department calculates discretionary income has changed. Under the new standard, the Department will now compute a borrowers’ discretionary income as the difference between a borrower's adjusted gross income and 225% of the federal poverty guideline amount, instead of 150%. As a result, people enrolled in SAVE will have more of their income exempted from the calculation, and will thus have more affordable monthly payments—and more people will not need to pay anything at all.

The plan also ensures that borrowers who meet their monthly payments won’t see their balances grow due to unpaid interest.  

If a borrower is unsure whether SAVE is the best repayment plan for them, they can use the Education Department’s Loan Simulator to calculate the best plan for them.

Read more: Why Women Will Suffer the Most From the Supreme Court's Student Loan Ruling

How does the website work? 

Applicants can review the information on file—including their FSA ID and income—to see what SAVE might save them. 

The Department of Ed estimates the application will take about 10 minutes to complete, though borrowers can pause and complete their application later.

Borrowers will be able to see a rough estimate of their monthly payments online. For example, a borrower who makes $60,000 annually and is single can expect to pay $227 per month toward their student loans. 

Changes to the SAVE plan are expected to roll out in July 2024. Starting next summer, borrowers can expect automatic enrollment in an income-driven repayment plan if they are 75 days late on a payment, will automatically receive credit toward forgiveness for some periods of deferment and forbearance, and more.

Read more: Student Loan Payments Are Resuming This Fall. Here’s What to Do If You Can’t Pay

What other measures can help borrowers? 

Since the failure of Biden’s $20,000 loan forgiveness plan, the Education Department has announced new programs meant to help borrowers. 

Part of that includes a “12 month on-ramp” to repayment plan, which will protect borrowers as they adjust to paying off their student loans again after the pandemic pause. Through the program, missed monthly payments will not be “considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies” from October 2023 through Sept. 30, 2024.

The Education Department also announced it is wiping out the student debt of more than 800,000 borrowers on July 14. It is also still reviewing federally managed borrower accounts to give borrowers credit on monthly payments that may have been previously ineligible, as part of the one-time account adjustment announced in April.

The Administration has also said it intends to pursue student loan forgiveness through the Higher Education Act.

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