On July 18, 2024, a Federal Court issued a stay preventing the Department of Education from operating the Saving on a Valuable Education (SAVE) Plan. Borrowers are currently unable to enroll in this plan but can still apply.
Last year, The Department of Education implemented it's new SAVE repayment plan. The benefits of the SAVE plan that were released last year were:
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
- Cover the borrower's unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.
- Calculate your monthly payment using just your income, if you are married filing separately. This will remove the previous requirement that included spousal income even when filing separately, helping keep your monthly payment low.
In July of 2024 , additional benefits were scheduled to start. However, ongoing lawsuits have put these changes on hold. The proposed changes include:
- Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan. Borrowers with undergraduate and graduate loans will have a monthly payment between 5-10%, based on the weighted average of their loan balances.
- This means that if a borrower has only undergraduate loans, then their payment will be cut in half. Borrowers with both undergraduate and graduate loans will also see a decrease in payment as the percent of discretionary income will be a weighted average between 5% and 10%.
- Borrowers with lower original loan balances could receive forgiveness sooner. Borrowers with starting loan balances under $12,000 will receive forgiveness on their remaining balance after 10 years.
- For each additional $1,000 on your loan balance, one additional year will be added to the forgiveness timeline (Ex: $13,000 = 11 years, $14,000 = 12 years, etc.)
- The maximum timeline to forgiveness is:
- 20 years if all loans you’re repaying under the plan were received for undergraduate study
- 25 years if any loans you’re repaying under the plan were received for graduate study
- The maximum timeline to forgiveness is:
- For each additional $1,000 on your loan balance, one additional year will be added to the forgiveness timeline (Ex: $13,000 = 11 years, $14,000 = 12 years, etc.)