SAVE Plan
Also known as: Saving on a Valuable Education Plan, SAVE (formerly REPAYE)
A federal student loan income-driven repayment plan enacted in 2023 to replace REPAYE. Uses 5% of discretionary income for undergraduate loans (10% for graduate) and a more generous discretionary income definition (225% of federal poverty level). Subject to ongoing court litigation.
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The SAVE Plan (Saving on a Valuable Education) was created by the US Department of Education in 2023 as a replacement for the older REPAYE plan. SAVE was designed to be the most generous of the four income-driven repayment (IDR) plans for federal student loans: monthly payment is 5% of discretionary income for undergraduate loans (lower than the 10% on IBR and PAYE), 10% for graduate loans, with a weighted average for borrowers with both. Discretionary income for SAVE purposes is computed as AGI minus 225% of the federal poverty guideline for the borrower's family size — substantially more generous than the 150% multiplier used by IBR and PAYE, which produces a much lower discretionary income figure and therefore a much lower monthly payment.
SAVE included a unique 'no interest accumulation' feature: if the borrower's calculated SAVE payment did not cover the full monthly interest accrual on the loan, the unpaid portion was waived rather than capitalized into the principal balance. This was the most generous feature of SAVE relative to the other IDR plans, and it eliminated the 'negative amortization' problem where IDR payments are too low to cover interest and the loan balance grows over time. The combination of low payment percentage + generous discretionary income + no interest accumulation made SAVE the structurally optimal choice for most borrowers when fully implemented.
SAVE was the subject of multiple court challenges starting in 2024, brought primarily by state attorneys general arguing that the Department of Education exceeded its statutory authority in setting SAVE's specific terms. After injunctions suspended implementation through 2024-2025, SAVE was wound down in 2026 and replaced by the Repayment Assistance Plan (RAP), with the Department of Education transitioning affected borrowers to other plans. The generous terms described above are no longer open to new enrollees; borrowers formerly on SAVE should verify their current plan and status at studentaid.gov.
For PSLF-tracked borrowers, SAVE produces the lowest monthly payment among the IDR plans, which maximizes the forgiveable balance at the 120-payment mark. For non-PSLF borrowers, SAVE produces the lowest out-of-pocket cost over the 20-year forgiveness horizon, with the forgiven balance taxed as income at year 20 (subject to whatever tax treatment applies in that year — the American Rescue Plan Act made IDR forgiveness tax-free through 2025, with post-2025 treatment depending on subsequent legislation). The MFS workaround for the marriage filing penalty applies to SAVE the same way it applies to IBR and PAYE.
- IDR plans deep dive — SAVE, IBR, PAYE, ICR and discretionary income The four federal student loan income-driven repayment plans: discretionary income, payment caps, recertification, marriage penalty, PSLF interaction.
- Federal vs private student loan refinance — the protections you lose What federal student loan borrowers forfeit by refinancing into private: PSLF eligibility, income-driven repayment, deferment, and discharge protections.
- IDR (Income-Driven Repayment) plans Federal student loan repayment plans capping monthly payments at a percentage of discretionary income, with forgiveness of remaining balance after 20-25 years. Required vehicle for Public Service Loan Forgiveness.
- PSLF (Public Service Loan Forgiveness) Public Service Loan Forgiveness is a US federal program that forgives the remaining balance on Direct federal student loans after 120 qualifying monthly payments made while employed full-time by a qualifying public-service employer.
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