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New Student Loan Debt Payment Plan Launched. Will it SAVE Money?

How you pay back your student loan debt is changing, likely for the better. Read about what to expect and how to enroll in Biden’s new SAVE program.

Biden talking to crowd. Student Loan debt repayment plan. SAVE plan.
Shutterstock/Matt Smith

A new student loan debt repayment plan, called SAVE, was just announced by the Biden Administration. This plan comes following Biden’s campaign promises to fix the problems of the former student loan program, which he says hurt borrowers. It also comes following increased demands by students for student loan debt cancellation. Under SAVE, an increased number of higher-income borrowers will qualify for $0 monthly payments.

The plan opened for enrollment last week and promises to save borrowers on average $1000 per year. This bill arrives at an important time, as student loan debt repayment will resume this October for the first time since its three-year, COVID-19 related, pause.

In an Instagram video, Biden said that the administration has “already approved over $116 billion in student loan debt cancellation.” He emphasized the plan’s importance, saying education “should be a ticket to the middle class, not a burden that weighs people down for decades to come.”

How Does the SAVE program work and who can enroll?

SAVE, similar, to most debt repayment plans, calculates how much debt you owe, monthly, based on your household’s income. The amount owed readjusts every year and SAVE generally forgives debt after 20 years. And, under SAVE, those with less than $ 12,000 in debt will have their debt forgiven after approximately 10 years.

Anyone with federal undergraduate or graduate student loan debt is eligible for SAVE. As are those who took out Federal Family Education loans. Parents of students, however, who took out loans for their children cannot enrol in SAVE. But they are eligible for other loan repayment plans.

For borrowers who already fell behind on their student loan debt repayment: SAVE will provide borrowers with a clean slate. They can enrol in the same way as all other borrowers.

The Biden administration said that applications will take about four weeks to process. So borrowers should enroll quickly so that SAVE is in effect for them before this upcoming payment cycle. For those whose applications are still pending in October, debt repayment will pause until the next payment cycle.

Interested students can enroll in SAVE by going to The application takes no longer than 10 minutes, according to Biden.

Where is it Working and Where Does it Fall Short?

biden talking on instagram about SAVE, new student loan debt repayment plan.
Biden announced the new SAVE plan in an Instagram video. He boasted the projected benefits of the plan. Instagram/@POTUS

The program promoted by Biden via Instagram as “the most affordable student loan plan ever,” does fall short of his initial plan to cancel up to $ 20,000 in student loan debt, which was blocked by the Supreme Court in June. Unlike that plan, SAVE will become a permanent debt repayment option, helping students reduce the amount they owe over time.

SAVE does significantly reduce the amount owed by most students. It reduces monthly payments for undergrads from 10% of their disposable income, under the previous plan, to 5% under SAVE. This means that borrowers only pay 5% of what is left of their income after covering basic needs, such as food and rent.

The plan also expands the amount of an individual’s income protected from payments. This means that any single borrower, earning less than $32, 806 per year will not have to pay any monthly student loan repayments. The education department estimates that an additional 1 million borrowers will qualify for $0 monthly payments under the new program.

SAVE also marks a step forward from previous loan repayment plans because it prevents student loans from growing over time. Unlike with previous plans, SAVE forgives any monthly interest not covered by the borrower’s required payments. This stops interest from building over time, causing student loan debt to grow.

When Will SAVE go Into Effect?

Most of the plan will go into effect as soon as the next loan repayment cycle. As soon as October, borrowers will no longer include their spouse in student loan debt repayment calculations and more income will be protected from debt repayment. But students will have to wait until July for debt repayment to be cut from 10% to 5%.

The new plan allows a higher percentage of borrowers’ income to go toward food, rent, and other necessities. Credit: Shutterstock/Aleutie

What does this mean for students?

Many students may be wondering whether they should automatically switch to the SAVE program and whether it is the most affordable program for them. Although SAVE provides the cheapest loan repayment option for most borrowers, students can go to to assess their repayment options. The loan simulator on the website automatically takes your loans and calculates the most cost-effective option for you.

Borrowers can also see their payment amount before signing up. And for those enrolled in REPAYE, the previous federal student loan repayment plan, no action is necessary at all. Borrowers under REPAYE automatically transfer to SAVE and future payments will reflect this change.

This program remains a far cry from the complete student loan debt forgiveness proposed by Senators Elizabeth Warren and Chuck Schumer, as well as Biden’s previous $39 Billion loan forgiveness proposal. However, it does provide students with the least expensive debt repayment option to date. And works toward Biden’s goal of making college and graduate school more financially accessible for the middle class.

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Hi I'm Satya. I'm a junior in the School of Foreign Service at Georgetown University. I'm majoring in Culture and Politics, with a minor in journalism and diplomatic studies. I am interested in international politics, pop culture, and fashion. I hope to pursue a career in political journalism.

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