The SAVE Plan is a new income-driven repayment (IDR) plan for student loan borrowers launched by the Biden-Harris Administration. The plan sets monthly payments at 5% to 10% of discretionary income and provides forgiveness in as little as 10 years, depending on how much the borrower owes. The SAVE Plan eliminates 100% of remaining monthly interest for both subsidized and unsubsidized loans after the borrower makes a scheduled payment, which means that if the borrower keeps up with their required payments, they will never see their balance grow. The White House estimates that over 20 million borrowers could benefit from the SAVE Plan, and the typical four-year public university borrower will save nearly $2,000 a year with the SAVE Plan, and 85% of community college borrowers are expected to be debt-free within 10 years.
However, the SAVE Plan may not be the best option for every borrower, depending on their repayment goals and income. Borrowers can use the loan simulator tool available on the Federal Student Aid website to compare all the available repayment options and choose the best one for their specific situation.
