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How to take advantage of Biden’s new student loan relief plan

SAVE, Biden’s new income-based repayment plan, could significantly bring down your monthly payments.

Cole holds a sign that says “Cancel Student Debt” while others march behind him.
Wisdom Cole, the National Director of the NAACP Youth and College Division, leads a march from the Supreme Court of the United States to the White House after the nation’s high court struck down President Biden’s student debt relief program on June 30, 2023, in Washington, DC.
Kent Nishimura / Los Angeles Times via Getty Images
Nicole Narea covers politics and society for Vox. She first joined Vox in 2019, and her work has also appeared in Politico, Washington Monthly, and the New Republic.

The Biden administration has rolled out a new income-driven repayment plan for student loans following the US Supreme Court’s decision earlier this year to strike down the White House’s previous student loan forgiveness plan.

The program, known as SAVE (Saving on a Valuable Education), is based on family size and income. It opened to any student borrower with a direct loan in good standing, including subsidized, unsubsidized, and consolidated loans on Tuesday. It’s expected to save participants $1,000 a year on average, while ensuring that low-earners will not have to make any payments, according to the White House.

“Monthly payments will be based on income, rather than their total student loan balance,” Vice President Kamala Harris said in a statement Tuesday. “In addition, as long as you make the monthly payments required under your plan, your loan balance will no longer grow because of unpaid interest — making sure that you make progress on paying down your debt.”

The program’s rollout comes ahead of the resumption of student loan payments this fall as the pandemic-era freeze expires. The Biden administration previously canceled $39 billion in federal student loans for more than 804,000 borrowers by accounting for payments made under income-driven repayment plans that it argues should have qualified toward loan forgiveness, but were previously unrecognized by loan servicers that collect payments.

[Related: Biden’s new plan to forgive $39 billion in student loans, explained]

Here’s what you need to know about how the new program works and how to access it.

Who is eligible and how the plan works

The SAVE plan is expected to be available to more than 20 million borrowers and is already in effect.

As of Tuesday, borrowers will not have to make payments if they have an income that is 225 percent of the federal poverty guidelines or less — that is, if they make less than $32,800 for individuals and $67,500 for a family of four. That covers more than a million borrowers, as estimated by the Biden administration, and payments will be suspended on an indefinite basis. Previously, income was only protected at 150 percent of the guidelines. People earning more than that amount will still see their monthly payments decrease by an average of $91 for individuals and $187 for a family of four as compared to before the pandemic payment freeze was instituted.

The plan also bars loan balances from growing due to unpaid interest. Under previous income-driven repayment plans, borrowers making payments that were lower than their monthly interest charge saw that interest accumulate.

[Related: The difficulty of restarting student loan payments, in 5 charts]

Additionally, married couples who file their taxes separately will no longer have to take into account their spouse’s income or include their spouse in their family size when calculating their monthly payments under SAVE.

How can you access the new payment plan?

Borrowers who are already enrolled in a repayment plan known as REPAYE or who have recently applied for it will be automatically enrolled in SAVE with no further action required.

If you haven’t yet applied for an income-driven repayment plan, then you can apply through the Department of Education’s Federal Student Aid website. The SAVE program will typically be the option with the lowest monthly payment available.

If you’re not sure what payment plan you’re currently enrolled in, you can check on your My Aide page.

What are the additional changes to come?

Additional relief for many borrowers will be implemented in July 2024.

All borrowers with eligible loans under SAVE will then see payments on their undergraduate loans decrease from 10 percent to 5 percent of income above 225 percent of the Federal Poverty guidelines.

Also starting in July 2024: Loans with original principal balances of $12,000 or less will also be forgiven after 120 payments or about 10 years’ worth of payments. An additional 12 payments will be required to access forgiveness for each $1,000 borrowed above that, at a maximum of 20 or 25 years worth of payments. Currently, payments must be made for a minimum of 20 or 25 years before loans of any amount can be forgiven under income-driven repayment plans.

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