The ultimate fate of student loan debt has been up for debate in recent months, but many borrowers restarting payments in October after three years may end up with a lower monthly bill than they had before.
The Biden administration’s Saving on a Valuable Education (SAVE) Plan, announced earlier this year, replaces the current income-driven repayment plan known as Revised Pay as You Earn (REPAYE) with reduced monthly payments and greater protection for income required to meet basic needs.
The result: More borrowers are expected to qualify for $0 payments. Many others will see lower monthly bills once the full program goes into effect in 2024.
How to know if you’re eligible for SAVE
Borrowers (current and future) with federal undergraduate or graduate student loans can enroll in the SAVE Plan. Eligible loans include the following:
Direct Subsidized LoansDirect Unsubsidized LoansDirect PLUS Loans made to graduate or professional studentsDirect Consolidation Loans that did not repay any PLUS loans made to parentsIn addition, the following loans are eligible for SAVE repayment once 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 studentsFFEL Consolidation Loans that did not repay any PLUS loans made to parentsFederal Perkins LoansParents who hold PLUS loans for their kids are not eligible for SAVE repayment. Loans in default need to be returned to good standing, such as through the Fresh Start program, to enroll in SAVE.
How to sign up for lower monthly student loan payments
If you are already enrolled in REPAYE (or recently applied for it), you don’t need to do anything at this point—you will be automatically transferred into the SAVE Plan. If you’re not sure, you can check which repayment plan you have on your StudentAid.gov dashboard.
If you aren’t currently on an income-driven repayment (IDR) plan or are enrolled in a plan besides REPAYE, you’ll need to apply for the SAVE Plan. Go to StudentAid.gov/SAVE and log into your account (or create one if you don’t have one already) to fill out the IDR application. You can expect this to take about 10 minutes, and you can track your application status through your portal.
If you need help completing the application, use the Federal Student Aid contact center to connect with support.
According to the Department of Education, borrowers who sign up by mid-August (so, right now) could see their lower monthly amount on their September statement for when payments restart in October. Application processing is expected to take about four weeks.
If you apply closer to your billing or payment date, or if your loan servicer can’t process your application in time, you’ll be placed in temporary forbearance—no payment required—so you don’t pay more than necessary.
You’ll also need to recertify your income each year because your payment adjusts based on what you earn. You can automate this by granting the Education Department access to your tax information during the application process—otherwise, you’ll have to update it manually.
