SAVE Plan to Ease Student Loan Burden Post Pandemic Pause

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In a significant development for student loan borrowers apprehensive about the resumption of their payments in October, the Saving on a Valuable Education (SAVE) Plan offers a new affordable alternative. The SAVE plan won’t solve every borrower’s financial constraints but could provide relief for millions drowning in other debt like high-cost credit cards or struggling to meet rent payments.

One of the standout features of the SAVE plan is that the interest on federal student loans won’t accumulate and ensnare you if you consistently meet the required payments. It is anticipated that around 70% of borrowers on income-driven repayment plans pre-pandemic are expected to benefit from this change alone, according to the U.S. Department of Education. This plan could be a game-changer for those who fear the growing total balance of their loans due to the negative amortization problem, where loan payment amounts are less than the new interest that accrues each month.

New SAVE Student Loan Plan: A Lifeline for Struggling Borrowers?

Student loan borrowers who are anxious about resuming payments in October can now take a breather, thanks to a new affordable option known as SAVE, or the Saving on a Valuable Education plan. This plan offers a solution for millions of borrowers who might find themselves buried in other debt or struggling to pay rent.

Understanding the SAVE Plan

One of the most attractive features of the SAVE plan is that the interest on federal student loans won’t accumulate if borrowers consistently make the required payments. This change is expected to benefit about 70% of borrowers who were on income-driven repayment plans before the pandemic-related pause, according to the U.S. Department of Education. Moreover, if the required monthly payment doesn’t cover the interest, the department will stop charging the interest not covered by that monthly payment.

Significant Features of SAVE

Bruce McClary, senior vice president of media relations and membership for the National Foundation for Credit Counseling, explains that the SAVE plan eliminates all remaining interest on subsidized and unsubsidized loans after a payment is made. This addresses the issue of negative amortization that can considerably increase the total loan balance over time, causing stress for many borrowers. Additionally, more borrowers will be able to reduce their federal student loan payments to $0 a month under the SAVE plan, provided their income is low enough.

Transitioning to SAVE

The SAVE plan, touted as the "most affordable repayment plan yet," replaces the old Revised Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan will be automatically switched to the SAVE Plan. However, borrowers enrolled in different income-driven repayment plans who wish to apply for SAVE will need to do so using the online portal at The SAVE plan will fully come into effect on July 1, 2024, but borrowers can still enjoy some key benefits now before the payment pause ends in October.

How does SAVE Help Your Budget?

Mark Kantrowitz, a student loan expert and author, states that the monthly payment will be lower with SAVE than with other income-driven repayment plans. The plan is expected to be particularly beneficial for low-income borrowers, with benefits based on income and household size. The SAVE plan is designed to help borrowers reduce their monthly payments, limit how much interest can accumulate over time, and ultimately reduce the amount that would be paid back over one’s lifetime.


The SAVE plan is a significant step towards making student loan repayment more manageable for borrowers. It not only offers the potential to lower monthly payments but also presents the opportunity for some borrowers to have their remaining debt canceled after at least 10 years of payments. However, it is essential for borrowers to fully understand the specifics of the plan and to ensure their eligibility for it. As always, it’s crucial not to make assumptions and seek advice from professionals if there are any lingering questions. In these challenging times, the SAVE plan offers a beacon of hope for those struggling under the weight of student loans.

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