The SAVE Plan May Be Repealed Soon: What Borrowers Need to Know
Big changes may be coming for student loan borrowers. With the SAVE plan potentially repealed under the new administration, understanding your repayment options is more important than ever. Here’s what you need to know to prepare and manage your loans effectively.
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What Is the SAVE Plan?
The SAVE (Saving on a Valuable Education) plan was created to make student loan payments more affordable by capping payments based on income and forgiving unpaid interest. However, this plan may be phased out, leaving borrowers with fewer options.
What Are Your Alternatives?
If the SAVE plan is repealed, here are some key alternatives to consider:
1. Income-Based Repayment (IBR)
IBR will likely become the primary IDR option for borrowers after SAVE is repealed. Under IBR, borrowers pay a percentage of their discretionary income toward their loans, with forgiveness available after 20 or 25 years, depending on when the loan originated. While IBR may not offer all the benefits of SAVE, it remains a solid option for managing payments based on income.
2. Pay As You Earn (PAYE)
Borrowers who qualify for PAYE can continue to benefit from payments capped at 10% of their discretionary income, with forgiveness available after 20 years. PAYE applications will reopen on December 15, 2024, and remain available until July 1, 2027, providing a critical option for borrowers during this period.
Eligibility for PAYE is limited to those who borrowed after a specific date, so it may not be available to everyone. Borrowers currently in forbearance under the SAVE plan should consider enrolling in PAYE to maintain progress toward loan forgiveness.
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3. Income-Contingent Repayment (ICR)
ICR provides an alternative for borrowers who may not qualify for PAYE or other income-driven repayment plans. Payments are based on a percentage of discretionary income, with forgiveness available after 25 years.
Applications for ICR will also reopen on December 15, 2024, and remain available until July 1, 2027. Borrowers pursuing forgiveness programs like PSLF can benefit from transitioning to ICR if they’re unable to enroll in other plans.
4. Revised Pay As You Earn (REPAYE)
REPAYE is currently unavailable, as it was replaced by the SAVE plan. However, with the likely repeal of the SAVE plan, REPAYE is expected to return as a primary repayment option for many borrowers.
For those with student loan debt from before 2009, REPAYE may become the most advantageous plan, offering payments based on a percentage of discretionary income and forgiveness after 20 or 25 years, depending on the loan type. Borrowers should prepare for REPAYE’s reintroduction and consider it as a key option to manage their debt effectively.
3. Income-Contingent Repayment (ICR)
ICR provides an alternative for borrowers who may not qualify for PAYE or other income-driven repayment plans. Payments are based on a percentage of discretionary income, with forgiveness available after 25 years.
Applications for ICR will also reopen on December 15, 2024, and remain available until July 1, 2027. Borrowers pursuing forgiveness programs like PSLF can benefit from transitioning to ICR if they’re unable to enroll in other plans.
4. Revised Pay As You Earn (REPAYE)
REPAYE is currently unavailable, as it was replaced by the SAVE plan. However, with the likely repeal of the SAVE plan, REPAYE is expected to return as a primary repayment option for many borrowers.
For those with student loan debt from before 2009, REPAYE may become the most advantageous plan, offering payments based on a percentage of discretionary income and forgiveness after 20 or 25 years, depending on the loan type. Borrowers should prepare for REPAYE’s reintroduction and consider it as a key option to manage their debt effectively.
5. Standard and Extended Repayment Plans
For borrowers who don’t qualify for or prefer not to use IDR plans, standard and extended repayment plans remain available. These plans involve fixed monthly payments over a set term, providing a predictable path to paying off your loans.
What Should You Do Now?
To prepare for changes, take these steps:
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Review Your Current Plan: Understand how changes to SAVE could impact you.
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Switch Plans if Necessary: If you’re on SAVE, explore other IDR plans to avoid interruptions.
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Strategize Your Taxes: Married borrowers may benefit from filing separately under certain plans.
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Stay Informed: Keep up with updates on federal loan policies.
How TitanPrep Can Help
Navigating these changes doesn’t have to be stressful. TitanPrep can help you find the best repayment strategy and stay on track for forgiveness.
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Guided borrowers to successfully discharge $87 million in student loan debt: Our expertise ensures borrowers receive the forgiveness they qualify for, saving them thousands.
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Saving $1.3 million in total monthly payments: We help clients find the right repayment plans to lower costs and reduce stress.
Don’t wait until changes disrupt your plans. Contact TitanPrep today and let us guide you through this transition with confidence and proven results.