What is the SAVE plan?
The Savings on a Valuable Education (1), or SAVE plan, is a new student loan repayment plan launched by the Biden-Harris administration. According to CNBC (2), “The Biden administration expects as many as 20 million people could benefit from its new program.”
What makes SAVE different?
- Single borrowers earning less than $32,800, or a family of four making under $67,500, will not owe loan payments anymore if they enroll in the option
- Instead of borrowers paying 10% of their discretionary income, borrowers will eventually be required to pay only 5% of their discretionary income when the pLan goes live
- This will be available to borrowers in July 2024 when the plan is fully implemented
- Borrowers with undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income
- The SAVE plan also increases the income exempted from the payment calculation to 225% of the poverty line, from 150%
- A chart shows the dramatic payment reductions by family size and income under the new plan
What are the impacts of SAVE on people?
- Remember, the SAVE plan only impacts you if you have federal student loans, not private
- Make sure to understand the plan fully and sign up if it will help you
- Apply here: https://studentaid.gov/announcements-events/save-plan (3)
- Student loans are not dischargeable in bankruptcy
- There is anecdotal evidence that decreased student loan payments will increase mental well being, savings, family formation, home ownership, and retirement savings
- Having an end in sight to paying off your student loans is a huge relief and mental burden removed
- The economy benefits when people are not weighed down with increasing loans and interest over decades
- That strengthens the tax base, allowing the government to help more people
- Overall, this seems like a huge win for those suffering under crushing student loan debt
- As our recent focus on 529 plans shows, educating more people broadens the opportunities for the individual and society as a whole
- A history of public and private college costs on Stacker (4) is eye opening
Happy that so many people will get student loan help.
Sincerely yours,
smilingdad
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Notes:
(1) Ed.gov How the New SAVE Plan Will Transform Loan Repayment and Protect Borrowers https://www2.ed.gov/policy/highered/reg/hearulemaking/2021/idrfactsheetfinal.pdf
(2) CNBC These student loan borrowers will see their monthly bill drop to $0 under Biden’s new SAVE plan https://www.cnbc.com/amp/2023/08/22/student-loan-borrowers-may-see-their-bill-drop-to-0-under-save-plan-.html
(3) Studentaid.gov SAVE Repayment Plan Offers Lower Monthly Loan Payments https://studentaid.gov/announcements-events/save-plan
(3) Stacker How college costs have changed in the last 50 years https://stacker.com/education/how-college-costs-have-changed-last-50-years
smilingdad 