The newes t income - driven repayment (IDR) plan — S av i n g o n a Va l u a b l e Ed u c at i o n (SAV E) p l a n — modifies and replaces the existing Revised Pay as You Earn (REPAYE) plan to meaningfully lower monthly payment s and overall loan balances for mos t s tudent loan borrowers . The goal of the new SAVE plan is to better assist low-income borrowers and provide more flexibility toward student debt forgiveness.
SAVE
REPAYE
Discretionary Income Threshold
225% of Federal poverty level
150% of Federal poverty level
Monthly Payments
Undergraduate: 5% of discretionary income Graduate/Professional: 10% of discretionary income Both types: between 5 and 10% of discretionary income based on a weighted average
All federal loan types: 10% of discretionary income
Years to Forgiveness
Undergraduate: 20 Graduate/Professional: 25
Undergraduate: 20 Graduate/Professional: 25
Forgiveness for Low Debt Borrowers
Forgiveness after 10 years for borrowers with an original principal balance of $12,000 or less
N/A
Treatment of Unpaid Interest
Eliminated each month
Capitalized
What follows are examples of different debt and income scenarios and how the SAVE plan compares to REPAYE. All borrowers are unmarried, are the only member of the household, and live in the lower 48 states. An interest rate of 6.6% was applied to both the graduate and prior undergraduate loans.
Borrower 1:
“Typical” Law Graduate • Undergraduate Debt: $29,000 • Law School Debt: $126,000 • Annual Income: $80,000
TOTAL PAID $61,756 LESS (-20.4%) FORGIVENESS AMOUNT $53,798 MORE (+45%)
• Total Loans After Capitalization: $173,711
Borrower 2: Public Institutions/ Small Firm • Undergraduate Debt: $27,000 • Law School Debt: $100,000 • Annual Income: $85,000
TOTAL PAID $43,908 LESS (-14.5%) FORGIVENESS AMOUNT $62,877 MORE (+388.4%)
• Total Loans After Capitalization: $140,702
Borrower 3: Private Institutions/ Private Practice • Undergraduate Debt: $0 • Law School Debt: $200,000 • Annual Income: $165,000 • Total Loans After Capitalization: $230,849
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TOTAL PAID $20,520 MORE (+4.6 %) FORGIVENESS AMOUNT $0 (SAME)