Key takeaways
- On April 12, the White House approved $7.4 billion in student loan relief for 277,000 borrowers enrolled in the SAVE plan.
- The Biden administration’s total student loan forgiveness now amounts to $153 billion across 4.3 million Americans.
- By signing up for SAVE, your loans may be eligible for forgiveness after 20 to 25 years.
Last Friday, the White House announced another round of student loan forgiveness for $7.5 billion across 277,000 borrowers who signed up for the Saving on a Valuable Education Plan, also known as SAVE.
The SAVE repayment plan was launched last summer after student loan payments resumed, following a more than three-year payment pause that started during the pandemic. Since its implementation, 8 million borrowers have received help with student loans. One out of every 10 borrowers with federal student loans has been approved for some form of student debt relief, according to the Department of Education’s April 12 press release.
This recent round of forgiveness comes just after the Biden administration’s April 8 proposal for widespread student loan forgiveness. Under the newest plan, borrowers with federal student loan debt who entered repayment 20 to 25 years ago could see their balances eliminated. Additionally, borrowers not eligible for full forgiveness may qualify for up to $20,000 in interest wiped out from their loan balance. Lower-income filers may be eligible to have more interest eliminated.
If you’re paying federal student loans, here’s what you need to know about how the current SAVE repayment plan can help wipe out your student loan debt and how to manage student loan payments in the meantime.
What is the SAVE income-driven repayment plan?
The Department of Education is currently forgiving federal student loans for borrowers enrolled in the SAVE repayment plan who originally borrowed $12,000 in undergraduate or graduate federal aid and have been paying their loans for at least 10 years.
If you borrowed more than $12,000, you can still receive forgiveness. For each additional $1,000 you borrowed, your repayment timeline expands by one year until you reach your repayment period cap. So if you borrowed $14,000, your repayment term would extend to 12 years. For undergraduate loans, the cap is 20 years. For graduate loans, it’s 25 years.
Those who are enrolled in SAVE and qualify for forgiveness don’t have to take any action -- the Department of Education will notify them that their remaining loans are being discharged.
How does SAVE work?
Borrowers who enroll in SAVE, the newest federal income-driven repayment plan, can save hundreds on their monthly loan payments, with many borrowers paying $0 per month. Monthly payments are calculated based on your income and family size rather than the amount you owe on the loan. Payments are currently capped at 10% of your discretionary income and will be cut to 5% starting in July. After 10 years of monthly payments, you may be eligible for forgiveness if you borrowed less than $12,000.
The SAVE plan was implemented last year after the White House’s widespread student loan forgiveness plan was shot down by the Supreme Court.
How do I enroll in SAVE?
You can sign up for the SAVE income-driven repayment plan on the StudentAid.gov website. You can compare different income-driven repayment plans and benefits to find the right fit for your budget.
What if I can’t afford my student loan payment?
Enrolling in SAVE may be the best way to lower your monthly student loan payment and move you a step closer to loan forgiveness. If you’re still struggling to make student loan payments, experts don’t recommend skipping payments. Instead, review your budget to see if you can scale back on nonessential purchases to find more room for your monthly payments. Research all income-driven repayment options available to see if you can reduce your monthly payment. Lastly, reach out to your loan servicer if you’re experiencing financial hardship.
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