A Guide to the SAVE Repayment Plan

The Saving on a Valuable Education (SAVE) Plan is the newest of the income-driven repayment plans for federal student loan borrowers. Under its framework, many borrowers can get a lower monthly payment and a shortened path to loan forgiveness.

However, the SAVE repayment plan has been mired in legal challenges from the beginning, and because of this, the Department of Education can't implement parts of the plan.

This guide explains what the SAVE Plan is, the legal challenges facing the income-driven repayment plan, and how it compares to other federal student loan repayment plans.

What is the SAVE repayment plan?

The Saving on a Valuable Education (SAVE) Plan is a federal income-driven repayment (IDR) plan that launched in the summer of 2023 and replaced the Revised Pay As You Earn (REPAYE) Plan. Like other IDR plans, the SAVE Plan uses your income and family size to calculate your monthly payment.

However, the SAVE Plan has additional benefits built into it. These include never seeing your balance grow when you keep up with your required payments, monthly payments as low as $0, and potential loan forgiveness after as few as 10 years.

Current student loan refinance rates

SAVE Plan status

Under the Biden administration, the Department of Education (ED) unveiled the SAVE Plan in August 2023. Within a year, legal challenges to the plan began to mount. In June 2024, a federal judge blocked the implementation of SAVE provisions through a preliminary injunction.

Due to the chaotic legal scene, the ED can't implement some parts of the SAVE Plan as of February 2025. Specifically, the ED can't use the SAVE formula to calculate monthly payments or forgive loans under the SAVE Plan framework.

With the Trump administration's flurry of actions surrounding the ED, it's unclear what will happen to the SAVE Plan.

“My opinion is that the SAVE Plan is toast,” says Jack Wang, a wealth adviser specializing in college financial aid at Innovative Advisory Group.

“The expectation from the Trump administration, by virtue of the actions by the Republican AGs that sued to block this plan, is that the SAVE Plan will be eliminated,” adds Wang.

For now, borrowers currently enrolled in the SAVE Plan are in a general forbearance. This means they aren't required to make payments and interest won't accrue until the legal issues are resolved.

“It's highly likely that the SAVE repayment plan won't exist in its current form after the lawsuits are resolved. However, that doesn't mean it's going away,” says Robert Farrington, founder of The College Investor.

Farrington continues, “It's important to remember that SAVE was simply a rebranding of the REPAYE Plan, and it had many similar features. The key differences were changing the discretionary income calculation, the percentage for the monthly payment, and the accelerated forgiveness.”

Farrington adds, “It's highly likely that the plan could simply return to the same features REPAYE had. Or, maybe eliminating just some aspects, like the controversial accelerated forgiveness.”

Who qualifies for the SAVE Plan?

If you were previously enrolled in the REPAYE Plan, your loan was automatically rolled over into the SAVE Plan. As of February 2025, new borrowers can enroll in the SAVE Plan. However, if you do so, your loan will be placed into the legal forbearance other SAVE borrowers are facing.

Borrowers with Direct Subsidized Loans, Direct Unsubsidized Loans, grad PLUS loans, and Direct Consolidation Loans that didn't repay parent PLUS loans may qualify for the SAVE Plan.

How does the SAVE repayment plan work?

The SAVE repayment plan is the most generous IDR plan available. Here's a look at the key features:

Monthly payments

Monthly payments are calculated based on your discretionary income and family size. Under the SAVE Plan, the income exemption increased from 150% to 225% of the poverty line. The payments on undergraduate loans represent 5% of your discretionary income. For a mixture of undergraduate and graduate loans, your payment is a weighted average between 5% and 10% of your discretionary income. For many borrowers, this means a significant decrease in their monthly payments.

According to these calculations, an individual with an annual income of $32,800 or less would have a monthly payment of $0. A borrower with a family of four and an annual income of $67,500 or less would also get a $0 monthly payment.

Interest

In terms of interest, borrowers who keep up with their payments won't see their balance grow, even if their monthly payment isn't enough to cover the unpaid interest that's accrued since their last payment. After making a full scheduled monthly payment, the SAVE Plan eliminates 100% of the remaining monthly interest.

Loan forgiveness

Under the SAVE Plan, it's possible to take advantage of loan forgiveness in as few as 10 years if you initially took out $12,000 or less in student loans. The forgiveness timeline increases by one year for every additional $1,000 you initially took out. For example, if you borrowed between $12,001 and $13,000, your remaining loan balance could be forgiven after 11 years of payments.

With the SAVE Plan on pause right now, the accelerated forgiveness timeline might not be worth the wait for some borrowers.

“For those going for Public Service Loan Forgiveness, it depends on how close they are to getting forgiveness,” says Wang.

“For example, if they are close, they should switch to another income-based plan so that they can make progress toward forgiveness,” Wang adds. “However, if they are far away from getting forgiveness, then they should stay put and use the forbearance period to shore up their finances now by saving what they would have been paying on their loans under the plan.”

Wang continues, “If they are not going for Public Service Loan Forgiveness, the advice is to use the forbearance period to build up their savings once payments resume, and resume at a likely higher amount.”

SAVE Plan vs. other income-driven repayment plans

The SAVE Plan isn't the only income-driven repayment plan out there.

“The SAVE Plan offered a more generous repayment calculation that resulted in lower payments than other [IDR] plans,” says Wang.

“Additionally, if the calculated payment did not cover the accrued interest each month, the amount of interest that exceeded the payment would be waived. Principal may not be paid down, but it wouldn't grow either,” he adds.

Here's how these features stack up against other options:

SAVE Plan vs. PAYE

Under the Pay As You Earn (PAYE) Plan, your monthly payment is set at 10% of your discretionary income, which is calculated by subtracting 150% of the federal poverty line for your family size from your adjusted gross income (AGI). After making payments for 20 years, you may qualify for loan forgiveness.

In contrast, the SAVE Plan subtracts 225% of the federal poverty line for your family from your AGI. For undergraduate loans, the monthly payment represents 5% of your discretionary income. If you have both undergraduate and graduate loans, it's a weighted average between 5% and 10% of your discretionary income. Additionally, the SAVE Plan allows for forgiveness after as few as 10 years of payments.

However, while there's a cap for monthly payments under the PAYE Plan (if your income goes up, your payment will never be higher than what you'd pay under the Standard Repayment Plan), the SAVE Plan doesn't have this cap.

SAVE Plan vs. IBR

Under the Income-Based Repayment (IBR) Plan, monthly payments are 10% of your discretionary income if you borrowed after July 1, 2014, and your repayment term is 20 years. If you borrowed before that date, your monthly payments are 15% of your discretionary income and your repayment term is 25 years.

The IBR Plan also offers the same monthly payment cap as the PAYE Plan.

SAVE Plan vs. ICR

Under the Income-Contingent Repayment (ICR) Plan, your monthly payment is either 20% of your discretionary income or what you'd pay on a fixed payment plan with a 12-year repayment term, adjusted to your income (whichever is less). After 25 years, you can qualify for loan forgiveness.

Like SAVE, the ICR Plan doesn't offer a payment cap.

How to apply for the SAVE Plan

If you want to sign up for the SAVE Plan, use the following steps as a guide:

• Head to StudentAid.gov: Log in to your StudentAid.gov account.
• Submit a request: To apply, submit an Income-Driven Repayment Plan Request. Be prepared to provide details about your finances. You can either grant consent for the ED to access your federal tax information or manually update your income. 

The response timeline varies based on your loan servicer. If you have questions about your application, reach out to your loan servicer.

“For borrowers looking for the lowest payment (or no payment), it's smart to consider SAVE,” says Farrington.

“Your application will simply end up in forbearance, meaning $0 payment and 0% interest. This can give you more time to plan and save money until the uncertainty is resolved,” Farrington adds.

Pros and cons of the SAVE repayment plan

Every repayment plan has advantages and disadvantages. Here's what to keep in mind about the SAVE Plan.

Pros

• Lower monthly payments: Your monthly payment will likely be lower on the SAVE Plan.
• Loan balance won't grow: Although interest will accrue on your loan, keeping up with your monthly payments means you'll never see your loan balance grow.
• Potentially faster path toward loan forgiveness: If you stick with your payments, you could see your loan balance forgiven in as few as 10 years.

Cons

• Legal uncertainty: For now, it's unclear how the SAVE Plan will move forward.
• No credit toward forgiveness during forbearance: While you're in the SAVE Plan's general forbearance, you don't get credit toward Public Service Loan Forgiveness or income-driven repayment forgiveness.
• No payment cap: Unlike the PAYE and IBR repayment plans, there's no monthly payment cap for the SAVE Plan. This means if your income goes up, you could pay more than what you'd pay under the Standard Repayment Plan.