Biden finalizes SAVE income-driven repayment plan most affordable student loan repayment option

The Biden administration finalizes the Saving on a Valuable Education (SAVE) plan, a new income-driven repayment plan that replaces the Revised Pay As You Earn (REPAYE) plan. SAVE cuts monthly payments for undergraduate borrowers in half compared to REPAYE, from 10% to 5% of discretionary income. It eliminates negative amortization by waiving accrued monthly interest for borrowers who make their full payments, even if those payments do not cover the full interest. Borrowers with original loan balances of $12,000 or less receive forgiveness after just 10 years of payments. Within months, Biden announces that SAVE cancels nearly $1.2 billion in debt for low-balance borrowers. Republican-led states sue to block SAVE, and courts later issue injunctions halting portions of the plan.