How the SAVE student loan plan works
Under the previous Revised Pay As You Earn Repayment Plan (REPAYE), borrowers were required to pay 10% of their discretionary income each month towards their undergraduate student debt. However, with the SAVE plan, borrowers will eventually only have to pay 5% of their discretionary income.
If a borrower earns less than $15 per hour, they won’t be required to make any payments under the new option, according to the Education Department.
“The SAVE plan is very generous to borrowers, almost like a grant after the fact,” said higher education expert Mark Kantrowitz.
Some of the benefits of the SAVE plan, such as the reduction in the percentage of discretionary income from 10% to 5%, will not be fully implemented until next summer due to regulatory changes.
However, the Education Department assures borrowers that if they sign up for the plan this summer, their application will be processed before student loan repayments resume in October.
Borrowers who sign up during the beta application period will not need to enroll again later, Kantrowitz explained.
How to apply for SAVE, and what information is required
You can apply for the SAVE plan directly on the Education Department website. Most borrowers complete the application for an income-driven repayment plan within 10 minutes, according to the administration.
Typically, you will need to provide your federal student aid ID, contact details, and financial information.