Biden opened a new student debt repayment plan. Here's how to enroll in SAVE.
The Biden administration opened its new student loan repayment plan for enrollment through a beta application, giving borrowers an early shot at signing up for the program.
The Saving on a Valuable Education (SAVE) plan is an income-driven repayment program, or IDR, which pegs a borrower's monthly payment to their income, lowering their financial burden. But IDRs have had some major pitfalls, such as allowing interest to snowball on a borrower's debt, which prompted the Biden administration to develop SAVE as an alternative.
The new beta site comes as student loan repayments are set to resume this fall after a three-year pause due to the COVID health crisis, and a month after the Supreme Court blocked President Joe Biden's plan to erase up to $20,000 in debt per student borrower. Interest will begin accruing in September, with monthly payments restarting in October for borrowers.
Here's what to know about SAVE.
How do I sign up for the SAVE beta program?
The beta site is available at the Federal Student Aid income-driven repayment plan website. At the top of the site, you'll see a link that says, "New: Apply for SAVE Plan."
The site notes that applicants can start an IDR application, which includes the option to enroll in the new SAVE repayment plan.
"We're accepting applications now to help us refine our processes ahead of the official launch. If you submit an IDR application now, it will be processed and will not need to be resubmitted," the site notes.
I don't see the SAVE option. What happened?
If you apply and you don't see the option, you should try again later, according to the Education Department.
The Biden administration said that the SAVE option will be "available on and off during this beta testing period."
What will my payments be under SAVE?
Borrowers could cut their monthly payments in half or even have monthly payments of $0. Many others will save up to $1,000 a year on repayments, according to the Biden administration.
The program is based on income and family size, with lower-income households with more family members paying the least.
For instance, a household with four family members and an annual income of $60,000 would pay $0 per month under the new plan, while a one-person household with the same income would pay $227 a month, the Education Department said.
Who qualifies for the SAVE plan?
The SAVE plan is available to borrowers with a direct loan in good standing, the Education Department said.
It will replace the existing Revised Pay-As-You-Earn (or REPAYE) plan, with people currently in the REPAYE plan being automatically enrolled in the SAVE plan, with their payments adjusted, the Biden Administration added.
How does the SAVE plan cut monthly payments?
The SAVE plan reduces the percentage of personal income that borrowers must pay each month toward their student loan. The current IDRs for undergraduate loans calculate that borrowers pay 10% of income above 225% of the poverty line, but the SAVE plan will cut that to 5%, according to the Biden administration.
Borrowers with both undergraduate and graduate loans will pay a weighted average of between 5% to 10% of their income, based on their loans' original principal balances, it added.