SAVE Plan: How the New Student Loan Repayment Program Works

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

The Department of Education recently released final details about its long-anticipated new income-driven repayment (IDR) plan. Known as the SAVE plan, an acronym for “Saving on a Valuable Education,” it’s expected to save borrowers at least $1,000 a year, with many borrowers eligible for $0 monthly payments.

With federal student loan payments resuming on September 1, 2023, familiarizing yourself with this new option is essential to ensure you’re on the most beneficial repayment plan. Here’s how the SAVE plan works and how to access it once enrollment opens.

What is the SAVE plan?

On June 30, 2023, the Biden-Harris administration announced the details of the new SAVE plan. This income-driven repayment plan replaces the existing Revised Pay As You Earn (REPAYE) plan, and is designed to make higher education less expensive for low- and middle-income students.

Depending on your situation, the SAVE plan can reduce your federal student loan payments by as much as half. Single borrowers who earn an annual income of $32,800 or less will have a $0 monthly payment under the new plan. It’s estimated that borrowers who earn more than that will still net more than $1,000 in overall savings each year compared to other IDR plans.

In addition to lowering payments, the plan also offers a 100% subsidy for unpaid interest, allows forgiveness sooner if you have a small loan balance, and, if you’re married, doesn’t include your spouse’s income when calculating your monthly payment.

How the SAVE plan works

You can only access income-driven repayment plans, including the new SAVE plan, if you have federal student loans. Parent PLUS loans are not eligible, but most other types are, including:

• Direct Subsidized or Unsubsidized Loans
• Graduate or professional PLUS loans
• Direct Consolidation Loans that didn’t include parent PLUS loans
• Consolidated Federal Family Education Loans (FFEL) that didn’t include parent PLUS loans

Like other IDR plans, the SAVE plan uses your family size and income to determine your monthly payment amount. In the short term, SAVE payment amounts will equal 10% of your discretionary income.

Borrowers under the SAVE plan will be in repayment for 20 or 25 years, depending on their situation. Those with loans from only their undergraduate degree have a 20-year repayment term, while those with debt from a graduate program will pay for 25 years.

After completing the required monthly payments, any remaining balance can be forgiven. However, the forgiven balance might be treated as taxable income.

If you enroll in the SAVE plan, expect these additional benefits:

• More of your income is exempt: Your monthly payment is calculated based on multiple factors, but a significant one is your discretionary income. This is the difference between your adjusted gross income and the federally determined poverty line. The SAVE plan compares your income to 225% of the poverty threshold, compared to the 150% ratio that other IDR plans use. That means more of your money is protected from repayment, and more borrowers will be eligible for a $0 payment.
• Unpaid interest is covered: If your monthly payment is too small to cover all the interest that accrues each month, the Department of Education will cover 100% of the remaining unpaid interest. As long as you stay on top of your payments, interest won’t be added to your balance.
• Excludes your spouse’s income: If you’re married and file your taxes separately, you no longer have to include your spouse’s income. Excluding spousal earnings effectively lowers the income that’s used for payment calculation so you avoid the so-called “marriage penalty.”

Credit: Federal Student Aid

More SAVE benefits to start next year

The three SAVE plan features mentioned above will be implemented in the summer of 2023 when enrollment officially opens. However, more changes are rolling out on July 1, 2024, which can cut your costs even more.

• Pay 5% of your income: If you only have undergraduate loans, you’ll see your monthly payment reduced from 10% to 5% of your discretionary income. For those repaying graduate loans, payments will be calculated based on a weighted average between 5% and 10% of income, depending on your original balance.
• Earn forgiveness after 120 payments: If the original loan amount you borrowed was $12,000 or lower, you can access loan forgiveness in just 10 years, instead of 20 or 25.
• Automatic enrollment: Any borrower who doesn’t make a payment for 75 days and previously agreed to disclose federal tax information to the Department of Education will be automatically enrolled in the SAVE plan.
• Paused payments will still earn credit: If you defer or forbear your loans for certain reasons — like unemployment, military service, or a natural disaster — your paused payments will still count toward the number required for forgiveness. If your reason doesn’t qualify, you can make catch-up payments to receive credit for that period.
• Extra help if you default: If you have a loan in default, you’ll get access to the Income-Based Repayment plan. If you would’ve had a $0 payment at the time of default, the loan is automatically put into good standing so you can then access SAVE.
• Consolidation won’t reset the clock: If you consolidate your loans midway through repayment, you can get credit for the payments you made before consolidation instead of having your payment count reset to zero.

How to enroll in the SAVE plan

The first phase of the SAVE plan will become available later during the summer of 2023, though a specific date has not been disclosed. The full program benefits go into effect in July 2024.

To enroll in the SAVE plan, you can submit an IDR plan request at StudentAid.gov. After logging in to your account, provide your contact information, the reason for the request, employment and income, family size, and marital status.

If you don’t see the SAVE plan as an option, you can select REPAYE and you’ll automatically be enrolled in SAVE when it becomes available. If you’re an existing REPAYE plan participant, you’ll automatically be switched to the SAVE plan when enrollment opens.

Borrowers who are already under another IDR plan can request a switch to REPAYE to get automatically moved to the SAVE plan once enrollment opens.

How is the SAVE plan different from other IDR plans?

Depending on your situation, the SAVE plan’s benefits — once all features become available in July 2024 — offer a significant edge over other IDR plans. Here’s how SAVE will compare with existing plans once it’s in full effect.

Lender	Variable rates from (APR)	Fixed rates from (APR)
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.07%+	4.4%+
Fixed APR: 4.4%+ Variable APR: 5.07%+ Min. credit score: 720 Loan amount: $10,000 to $400,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Military deferment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must have a credit score of at least 720, a minimum income of $60,000, and must be a resident of Texas Customer service: Email, phone Soft credit check: 720 Cosigner release: No Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 – $149,000 Max. Graduate Loan Balance: $200,000 – $400,000 Offers Parent PLUS Refinancing: Does not disclose
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	6.83%+1	6.8%+1
Fixed APR: 6.8%+1 Variable APR: 6.83%+1 Min. credit score: Does not disclose Loan amount: $10,000 to $750,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay, loyalty Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: Firstmark Services Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $150,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.99%+2	5.99%+2
Fixed APR: 5.99%+2 Variable APR: 5.99%+2 Min. credit score: Does not disclose Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 12, 15 Repayment options: Military deferment, forbearance, loans discharged upon death or disability Fees: Late fee Discounts: Autopay Eligibility: All states except for ME Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: After 24 to 36 months Loan servicer: College Ave Servicing LLC Max. Undergraduate Loan Balance: $100,000 to $149,000 Max. Graduate Loan Balance: Less than $300,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	7.8%+5	6.0%+5
Fixed APR: 6.0%+5 Variable APR: 7.8%+5 Min. credit score: 700 Loan amount: $7,500 to $200,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Immediate repayment, academic deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and submit two personal references Customer service: Email, phone Soft credit check: Yes Cosigner release: After 36 months Loan servicer: Granite State Management & Resources (GSM&R) Max. Undergraduate Loan Balance: $150,000 to $249,000 Max. Graduate Loan Balance: $150,000 to $199,000 Offers Parent PLUS Refinancing : Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.28%+3	5.08%+3
Fixed APR: 5.08%+3 Variable APR: 5.28%+3 Min. credit score: 680 Loan amount: $10,000 to $250,000 Loan terms (years): 5, 7, 10, 15, 20 Repayment options: Forbearance Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident, have at least $15,000 in student loan debt, and have a bachelor’s degree or higher from an approved school Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: Mohela Max. Undergraduate Loan Balance: $250,000 Max. Graduate Loan Balance: $250,000 Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	8.12%+4	5.9%+4
Fixed APR: 5.9%+4 Variable APR: 8.12%+4 Min. credit score: 670 Loan amount: $5,000 to $250,000 Loan terms (years): 5, 10, 15, 20 Repayment options: Academic deferment, military deferment, forbearance Fees: Late fee, returned payment fee Discounts: Autopay Eligibility: Must be U.S. citizen or permanent resident Customer service: Email, phone, chat Soft credit check: Yes Cosigner release: Yes Max undergraduate loan balance: $250,000 Max graduate loan balance: $250,000 Offers Parent PLUS refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.02%+	4.49%+
Fixed APR: 4.49%+ Variable APR: 5.02%+ Min. credit score: 700 Loan amount: $5,000 to $300,000 Loan terms (years): 5, 7, 10, 15 Max. undergraduate Loan Balance: $125,000 Time to Fund: 10 to 30 days Repayment options: Immediate repayment, forbearance Fees: Late fee Discounts: Autopay Eligibility: Must be a U.S. citizen or permanent resident and have already graduated with at least an associate degree from an eligible institution Customer service: Email, phone Soft credit check: Yes Cosigner release: After 12 months Loan servicer: LendKey Technologies Inc. Max. graduate Loan Balance: $175,000 Credible Review: LendKey Student Loans review Offers Parent PLUS Refinancing: No
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	5.5%+
Fixed APR: 5.5%+ Variable APR: N/A Min. credit score: 670 Loan amount: $10,000 up to the total amount Loan terms (years): 7, 10, 15 Repayment options: Military deferment, loans discharged upon death or disability Fees: None Discounts: None Eligibility: Must be a U.S. citizen or permanent resident and have at least $10,000 in student loans Customer service: Email, phone Soft credit check: Yes Cosigner release: No Loan servicer: AES Max. Undergraduate Loan Balance: No maximum Max. Gradaute Loan Balance: No maximum Offers Parent PLUS Refinancing: Yes
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	5.34%+ – 10.79%+8	7.35%+ – 14.25%+8
Fixed APR: 5.34%+ – 10.79%+8 Variable APR: 7.35%+ – 14.25%+8 Min. credit score: Mid-to-high 600’s FICO8 Loan amount: $5,000 to $500,000 (depending on degree) Loan terms (years): 5, 7, 10, 15, 20, 25 years8 Time to fund: 3 business days Repayment options: Immediate Fees: Late fee, NSF fee Discounts: Autopay8 Eligibility: Must be a U.S. citizen or have permanent residency status with a valid U.S. Social Security number Customer service: Email, phone Soft credit check: Yes8 Cosigner release: After 24 months8 Loan servicer: Firstmark Services Max. undergraduate loan balance: $125,000 Max. graduate loan balance: $500,000 Offers Parent PLUS loans: Yes Min. income: You or your cosigner must meet Nelnet Bank’s income criteria
Credible Rating Credible lender ratings are evaluated by our editorial team with the help of our loan operations team. The rating criteria for lenders encompass 78 data points spanning interest rates, loan terms, eligibility requirement transparency, repayment options, fees, discounts, customer service, cosigner options, and more. Read our full methodology.	N/A	5.79%+
Fixed APR: 5.79%+ Variable APR: N/A Min. credit score: 680 Loan amount: $7,500 to $250,000 Loan terms (years): 5, 10, 15 Repayment options: Academic deferment, military deferment, forbearance, loans discharged upon death or disability Fees: None Discounts: Autopay Eligibility: Available in all 50 states; must also have at least $7,500 in student loans and a minimum income of $40,000 Customer service: Email, phone Soft credit check: Does not disclose Cosigner release: No Loan servicer: Rhode Island Student Loan Authority Max. Undergraduate Loan Balance: $150,000 – $249,000 Max. Graduate Loan Balance: $200,000 – $249,000 Offers Parent PLUS Refinancing: Yes
Compare personalized rates from multiple lenders without affecting your credit score. 100% free! Compare Now
All APRs reflect autopay and loyalty discounts where available | 1Citizens Disclosures | 2College Ave Disclosures | 5EDvestinU Disclosures | 3 ELFI Disclosures | 4INvestEd Disclosures | 7ISL Education Lending Disclosures  | 8Nelnet Bank Disclosures

About the author

Credible Staff

The goal of the Credible editorial writers and staff is to help our readers get up to speed on issues surrounding student loans, mortgage, and personal finance, so you can make informed decisions. We’re here to help you stay on top of the latest news, trends, concepts, and changes in policy and regulations.

Read More

Home » All » Student Loan Refinancing » SAVE Plan: How the New Student Loan Repayment Program Works