Biden’s New Student Loan Forgiveness Plan (SAVE) Now Open. Here’s What Should Know. 2023

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In the United States, the student loan crisis has been a pressing issue for years, with millions of Americans grappling with mounting debt. The burden of student loans has been a barrier to financial stability for many, often delaying milestones such as home ownership, starting a family, or launching a business. 

But a new plan introduced by President Joe Biden’s administration promises to bring much-needed relief to borrowers. 

The Saving on a Valuable Education (SAVE) Plan, a fresh approach to student loan forgiveness, is now open for applications. 

This groundbreaking initiative could change the landscape of student debt in America, offering a lifeline to those struggling under the weight of their educational loans.

The Need for a New Plan

The journey to the SAVE Plan began with a setback. The Supreme Court’s ruling in Department of Education v. Brown blocked President Biden’s original plan to cancel $430 billion in student loan debt. 

This decision sent shockwaves through the community of student loan borrowers, many of whom had been hoping for broad-based loan forgiveness. But the Biden administration was undeterred. 

Recognizing the urgent need for a new approach to student loan debt relief, they went back to the drawing board, committed to finding a different way to bring debt relief to millions of borrowers. 

The result is the SAVE Plan, a testament to the administration’s commitment to addressing the student loan crisis head-on.

Unveiling the SAVE Plan

The Saving on a Valuable Education (SAVE) Plan is more than just a new student loan repayment program; it’s a beacon of hope for millions of student loan borrowers. 

This plan is designed to replace the existing Revised Pay As You Earn (REPAYE) Plan, offering more favorable terms and conditions for borrowers. 

The most exciting news? The SAVE Plan is now open for applications, marking a significant milestone in the Biden administration’s efforts to address the student loan crisis.

Key Features of the SAVE Plan

The SAVE Plan is packed with features designed to make student loan repayment more manageable. Here are some of the key benefits:

  • Increased Income Exemption: The SAVE Plan increases the income exemption from 150% to 225% of the poverty line. This means a larger portion of your income will be exempt from consideration when calculating your monthly payment, potentially significantly decreasing your monthly payment amount.
  • Elimination of Remaining Interest: The plan eliminates 100% of the remaining interest for both subsidized and unsubsidized loans after a scheduled payment is made under the SAVE Plan. This means that if you make your monthly payment, your loan balance won’t grow due to unpaid interest.
  • Exclusion of Spousal Income: For those who are married and file taxes separately, the SAVE Plan excludes spousal income from the calculation of monthly payments. This removes the need for your spouse to cosign your IDR application.

But that’s not all. The SAVE Plan also has some exciting changes on the horizon, designed to make loan repayments even more affordable.


Future Changes to the SAVE Plan

Starting next summer, borrowers on the SAVE Plan will see their payments on undergraduate loans cut in half, reduced from 10% to 5% of income above 225% of the poverty line. 

If you have both undergraduate and graduate loans, you’ll pay a weighted average of between 5% and 10% of your income based on the original principal balances of your loans. 

This change is designed to make loan repayments even more affordable.

Additional Benefits in 2024

The SAVE Plan includes additional benefits that will go into effect in July 2024. These include reducing payments further, making it easier to manage repayment, and providing forgiveness for certain loan balances after a set number of years. 

For example, borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments. The maximum repayment period before forgiveness increases by one year for every additional $1,000 borrowed.

How to Apply for the SAVE Plan

Applying for the SAVE Plan is designed to be a straightforward process. If you’re currently enrolled in the REPAYE Plan, the transition is even simpler – you’ll be automatically enrolled in the SAVE Plan once it becomes available. This means you won’t need to take any additional action to benefit from the new plan.

For those not currently on the REPAYE Plan, the application for the SAVE Plan is now open. You can apply directly through the website. Be sure to gather all necessary information about your income and family size, as these factors will influence your monthly payment under the plan.

Income Driven Repayment Plan Form

The Potential Impact of the SAVE Plan

The SAVE Plan promises to bring significant relief to millions of student loan borrowers. The Department of Education estimates that a single borrower who makes less than $15 an hour will not have to make any student loan debt payments under the new plan. 

This could be a game-changer for lower-income borrowers struggling to balance loan payments with other financial responsibilities.

Moreover, the Department of Education projects that borrowers will see their total payments per dollar borrowed fall by 40% under the new plan. 

This reduction is even more significant for those with the lowest projected lifetime earnings, who could see their payments per dollar drop by 83%. Even those with the highest projected lifetime earnings are expected to see a 5% reduction.

The SAVE Plan and the Higher Education Act

The SAVE Plan isn’t just a standalone initiative; it’s rooted in the authority of the Higher Education Act (HEA). The HEA, a law passed in 1965, was designed to provide support to post-secondary students and institutions. 

By leveraging the HEA, the SAVE Plan allows the Education Secretary to “compromise, waive or release loans under certain circumstances,” providing a legal basis for the plan’s ambitious debt relief measures.


The introduction of the SAVE Plan marks a significant step forward in addressing the student loan crisis. With its focus on income-driven repayment, elimination of remaining interest, and future benefits, the plan promises to make loan repayment more manageable for millions of borrowers. 

As the plan rolls out and more borrowers begin to see its impact, it’s clear that the SAVE Plan represents a new chapter in the story of student loan debt in America. 

Whether you’re a current student, a recent graduate, or a long-time borrower, the SAVE Plan is worth exploring as a potential tool to navigate your student loan repayment journey.


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