Student loan borrowers eligible for forgiveness under the Saving on a Valuable Education (SAVE) Plan should expect their loans to be discharged soon.
On Wednesday, Feb. 21, 2024, the Biden-Harris Administration announced that it will automatically discharge $1.2 billion in loans for nearly 153,000 borrowers who are eligible under the SAVE plan.
Eligible borrowers started receiving emails from President Joe Biden on Wednesday. Borrowers do not need to do anything to receive forgiveness. Student loan services will begin to process forgiveness in the coming days.
From now on, borrowers who are eligible for forgiveness under the SAVE plan will have their loans automatically discharged. The Department of Education will also begin emailing borrowers who can become eligible for forgiveness if they switch to the SAVE plan.
Who is already eligible for forgiveness?
Borrowers who are eligible for forgiveness must meet the following qualifications:
- Be enrolled in the SAVE Plan
- Have been making at least 10 years of payments
- Have originally taken out $12,000 or less for college
All borrowers on the SAVE plan receive forgiveness after 20 or 25 years, depending on whether they have loans for graduate school.
The benefit is based on the original principal balance of all federal loans borrowed and not what the borrower currently owes or the amount of an individual loan.
You can learn more about forgiveness eligibility at studentaid.gov.
How to calculate when you’ll be eligible for forgiveness?
Forgiveness begins at 10 years (120 monthly payments) for people who borrowed $12,000 or less. The repayment term increases for every $1,000 you borrowed above $12,000.
For borrowers with loans that have not been consolidated, the department will consider the sum total of your loans that have an outstanding balance. For borrowers who have consolidation loans, the department will consider the initial balances of all of the underlying loans that were consolidated into your consolidation loans instead of the starting balance of your consolidation loan.
Learn more about eligibility at studentaid.gov.
What is the SAVE plan?
The SAVE plan is an income-driven repayment plan that replaced the Revised Pay As You Earn (REPAYE) plan.
Under the SAVE Plan, a borrower’s monthly payment is determined based on their income and family size.
The following benefits went into effect as soon as the SAVE Plan became active:
- The SAVE Plan increases the income exemption from 150% to 225% of the poverty line. In this plan, your monthly payment amount is based on discretionary income -- which is defined as the difference between your adjusted gross income (AGI) and 225% of the U.S. Department of Health and Human Services Poverty Guideline amount for your family size.
Department of Education provided the following example: “That means you will not owe loan payments if you are a single borrower earning $32,800 or less or a family of four earning $67,500 or less (amounts are higher in Alaska and Hawaii). Borrowers earning more than these amounts will save at least $1,000 per year, compared to the current income-driven repayment plans.”
The table below shows the 2024 Poverty Guidelines:
| Persons in family/household | Poverty guideline |
|---|---|
| 1 | $15,060 |
| 2 | $20,440 |
| 3 | $25,820 |
| 4 | $31,200 |
| 5 | $36,580 |
| 6 | $41,960 |
| 7 | $47,340 |
| 8 | $52,720 |
The plan eliminates 100% of the remaining interest for both subsidized and unsubsidized loans after a scheduled payment is made. This means as long as you’re making your monthly payment, the balance of your student loans won’t grow due to unpaid interest.
Department of Education provided the following example: For example: “If $50 in interest accumulates each month and you have a $30 payment, the remaining $20 would not be charged.”
The SAVE Plan excludes spousal income for borrowers who are married and file separately. A spouse will not need to cosign an IDR application.
What are the SAVE Plan benefits that will go into effect in 2024?
There are additional benefits that won’t go into effect until July 2024.
The Department of Education listed the following benefits:
- Payments on undergraduate loans will be cut in half (reduced from 10% to 5% of income above 225% of the poverty line). Borrowers who have undergraduate and graduate loans will pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.
- Borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. For example, if your original principal balance is $14,000, you will see forgiveness after 12 years. Payments made previously (before 2024) and those made going forward will both count toward these maximum forgiveness timeframes.
- Borrowers who consolidate will not lose progress toward forgiveness. They will receive credit for a weighted average of payments that count toward forgiveness based upon the principal balance of the loans being consolidated.
- Borrowers will automatically receive credit toward forgiveness for certain periods of deferment and forbearance.
- Borrowers will be given the option to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.
- Borrowers who are 75 days late will be automatically enrolled in IDR if they have agreed to allow the Department of Education to securely access their tax information.
Which loans are eligible?
The following loans are eligible:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
The following loans are eligible if consolidated into a Direct Consolidation Loan:
- Subsidized Federal Stafford Loans (from the FFEL Program)
- Unsubsidized Federal Stafford Loans (from the FFEL Program)
- FFEL PLUS Loans made to graduate or professional students
- FFEL Consolidation Loans
- Federal Perkins Loans
The following loans are ineligible:
- Direct PLUS Loans made to parents
- Direct Consolidation Loans that repaid PLUS loans made to parents
- FFEL Program Loans (some types can become eligible if consolidated)
- Federal Perkins Loans (can become eligible if consolidated)
- Any loan that is currently in default
What will my monthly payments be under the SAVE plan?
The SAVE Plan calculates your monthly payment amount based on your income and family size.
For example, anyone making $32,800 a year or less will have a monthly payment of $0. If you have a $0 payment due, you do not need to pay anything that month.
A single person who has a $25,000 loan with a 5% interest rate and makes $38,000 a year would likely have a $43 monthly payment under the SAVE Plan, according to the Department of Education.
Your loan servicer will calculate your actual monthly payment amount under the SAVE Plan.
The image below shows an estimated monthly payment under the SAVE Plan. An accessible version of the image above is available on the StudentAid.gov website.
How to check if you are on the SAVE plan
You can check and see if you’re on the SAVE plan by taking the following steps:
- Log in to StudentAid.gov
- Go to your My Aid page
- Scroll down, and view your loans.
Each loan will list a repayment plan.
If you don’t have a StudentAid.gov account, you can create an account.
Borrowers who believe they are eligible for forgiveness under the SAVE plan are encouraged to sign up at StudentAid.gov/save.
Still have questions? More information about the SAVE Plan is available on the Department of Education’s website.