The Federal Student Aid office, operating under the Department of Education, has recently unveiled the Saving on a Valuable Education (SAVE) Plan as a replacement for the Revised Pay As You Earn (REPAYE) Plan. Starting next summer, the student loan SAVE program will cut borrowers’ monthly payments in half, reducing them from 10% to 5% of income above 225% of the poverty line.
Eligibility for Student Loan SAVE Program
According to GoBankingRates, while some changes will be implemented this summer, the student loan SAVE program’s full range of benefits will take effect in 2024. One of the most notable improvements is the increase in the income exemption from 150% to 225% of the federal poverty line.
According to information from the White House, almost all borrowers with federal loans in good standing will qualify for the student loan SAVE program. Moreover, those currently enrolled in REPAYE will automatically be included in the new program, ensuring a seamless transition.
This means that individuals earning $32,800 or less and families of four earning $67,500 or less will be exempt from loan payments. For those residing in Alaska and Hawaii, the exemption amounts will be higher.
Even borrowers earning more than the specified thresholds stand to gain from the student loan SAVE program. According to the Federal Student Aid office, they will still save a minimum of $1,000 annually when compared to the current income-driven repayment (IDR) plans.
Furthermore, individuals who diligently make their regular monthly payments will no longer have to bear the burden of additional unpaid interest. In essence, if your monthly interest accrues to $70 but your payment is set at $50, you will not be charged the remaining $20.
Additionally, the student loan SAVE program will eliminate 100% of the remaining interest for subsidized and unsubsidized loans after a scheduled payment is made.
It also provides a significant advantage for married individuals filing taxes separately, as spousal income will no longer be considered when determining eligibility for the program.
For those already enrolled in the REPAYE Plan or who have recently applied, there is no need to worry.
Excitingly, starting next summer, the student loan SAVE program will halve borrowers’ monthly payments, reducing them from 10% to 5% of income above 225% of the poverty line. Consequently, some borrowers may even find themselves with a monthly bill of $0.
How to Apply for Student Loan SAVE Program?
To participate in the student loan SAVE program, eligible individuals must apply through their loan servicer or by submitting a request via their FSA account.
According to a published article, the application process will be available later this summer, granting borrowers ample time to prepare their submissions.
The White House has promised to launch a direct application website later this summer, streamlining the process for prospective participants. For those eager to begin, enrolling in an existing Income-Driven Repayment plan will ensure automatic inclusion in the student loan SAVE program.