Good news for student loan borrowers: SAVE, the new federal student loan income-driven repayment plan, offers generous benefits and a simplified application process.
The U.S. Department of Education recently introduced the most generous federal student loan income-driven repayment (IDR) plan to date. Specifically, the Saving on a Valuable Education (SAVE) Plan was launched after the U.S. Supreme Court blocked the proposed federal student loan cancellation in June 2023, before payments were set to restart in October 2023 after a three-year hiatus. Some of the benefits of SAVE have already taken effect, and others will begin in July 2024 when the plan is fully implemented. While implementation is occurring in phases, eligible borrowers can sign up online now with a beta version of the application.
SAVE is an income-driven repayment (IDR) plan that calculates a borrower’s monthly payment according to their income and family size, replacing the previously predominant Revised Pay As You Earn (REPAYE) Plan.
Although the SAVE Plan is the preferred choice for many federal loan recipients, there are circumstances, typically concerning very-high-income borrowers, where alternative repayment plans may prove more advantageous. Additionally, there will be a one-time IDR account adjustment at the end of this year, enabling borrowers to consolidate their loans without “resetting the clock” on forgiveness. Individuals consolidating two or more loans as part of the REPAYE/SAVE program, should begin this process as soon as possible.
Benefits that take effect now:
Benefits that will take effect in July 2024:
There are different ways to enroll:
For more information about the new SAVE Plan, and to see monthly payment estimates based on income and family size, visit the federal student aid website. For many borrowers, taking full advantage of the benefits of this plan will require assessing its details and acting early. As always, if you have questions about how IDR can be leveraged within the context of a larger financial plan, reach out to your financial advisor for a consultation.
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