After the Supreme Court nixed President Biden’s student loan forgiveness plan, the Administration quickly unveiled a new initiative—Saving on a Valuable Education (SAVE). This new program proposes to revamp the federal student loan income-driven repayment (IDR) program. SAVE could cut borrower loan payments in
half.
The program, which is available to student borrowers with a Direct Loan in good standing, replaces the existing Revised Pay-As-You-Earn (REPAYE) plan, which was previously the most generous IDR plan. Borrowers currently in the REPAYE plan will be automatically enrolled in SAVE and should see their payments automatically adjusted with no action on their part.
The IDR is intended to adjust student loan payments based on income to help those who may be dealing with unaffordable student loan payments. The SAVE program hopes to provide more generous repayment options for those with undergraduate debt. It is also expected that SAVE will prevent “negative amortization,” which is the process of student loan balances increasing even as borrowers make on time payments. SAVE should also make it easier for individuals to qualify for student loan forgiveness.
Some of the benefits of the SAVE program are now in effect. Others, such as those below, will go into effect on July 1, 2024:
• Payments on undergraduate loans will be cut in half (from 10% to 5% of incomes above 225% of FPL).
• Borrowers whose original principal balances were $12,000 or less will receive forgiveness after 120 payments (the equivalent of 10 years in repayment), with an additional 12 payments added for each additional $1,000 borrowed above that level, up to a maximum of 20 or 25 years. Current IDR plans require all borrowers, even those who only attended school for a single term, to repay their loans for at least 20 or 25 years before receiving forgiveness of any outstanding balance.
ASCP strongly supports expanding
student loan forgiveness benefits, such as through the public service loan forgiveness program and the
IDR, to help individuals pay for the education and training costs associated with careers in laboratory medicine.
For more information on the SAVE program. Click
here.
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