A Guide to the SAVE Repayment Plan

The SAVE repayment plan was created to give federal student loan borrowers more affordable monthly payments and faster access to forgiveness. But amid legal challenges and new federal legislation in 2025, the future of SAVE is uncertain.

Millions of borrowers enrolled in the plan are now in administrative forbearance, although interest on the loans began accruing again in August 2025, and borrowers aren’t receiving any credit toward loan forgiveness. 

Meanwhile, the Department of Education is preparing for broader repayment changes mandated under new federal law. Here's what borrowers need to know about SAVE’s benefits, legal status, and how it compares with other student loan repayment options.

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What is the SAVE repayment plan?

The Saving on a Valuable Education (SAVE) Plan is a federal income-driven repayment (IDR) plan that launched in summer 2023 as the replacement for the Revised Pay As You Earn (REPAYE) Plan. Like other IDR programs, SAVE calculates your monthly payment based on your income and family size.

SAVE was designed to offer:

• Lower monthly payments for most borrowers
• A larger income exemption that reduces discretionary income
• A guarantee that balances would not grow due to unpaid interest
• Accelerated forgiveness for borrowers with initial balances of $12,000 or less

While these features made SAVE the most generous IDR plan available, several of its core benefits are not currently being implemented due to legal challenges.

SAVE Plan status

After SAVE launched in 2023, several states filed lawsuits challenging its legality. In June 2024, a federal judge issued a preliminary injunction blocking the SAVE Plan.

As of late 2025:

• The SAVE Plan remains active in name, but key benefits are legally blocked.
• Borrowers enrolled in SAVE have been placed into mandatory forbearance, meaning:
  • No principal payments are due (although interest began accruing again in August 2025).
  • No progress counts toward Public Service Loan Forgiveness (PSLF) or IDR forgiveness.

Federal law enacted in 2025 — the One, Big, Beautiful Bill Act” — will phase out SAVE and other legacy IDR plans by July 1, 2028, replacing them with a single income-driven plan called the Repayment Assistance Plan (RAP).

How does the SAVE repayment plan work?

The SAVE repayment plan was designed as the most generous IDR plan available. Here's a look at the key features:

Monthly payments

Monthly payments are calculated based on your discretionary income and family size. Under the SAVE Plan, the income exemption increased from 150% to 225% of the poverty line. The payments on undergraduate loans represent 5% of your discretionary income. For a mixture of undergraduate and graduate loans, your payment is a weighted average between 5% and 10% of your discretionary income. For many borrowers, this means a significant decrease in their monthly payments.

According to these calculations, an individual with an annual income of $32,800 or less would have a monthly payment of $0. A borrower with a family of four and an annual income of $67,500 or less would also get a $0 monthly payment.

Interest

In terms of interest, borrowers who keep up with their payments won't see their balance grow, even if their monthly payment isn't enough to cover the unpaid interest that's accrued since their last payment. After making a full scheduled monthly payment, the SAVE Plan eliminates 100% of the remaining monthly interest.

Loan forgiveness

Under the SAVE Plan, it's possible to take advantage of loan forgiveness in as few as 10 years if you initially took out $12,000 or less in student loans. The forgiveness timeline increases by one year for every additional $1,000 you initially took out. For example, if you borrowed between $12,001 and $13,000, your remaining loan balance could be forgiven after 11 years of payments.

Pros and cons of the SAVE repayment plan

Every repayment plan has advantages and disadvantages. Here's what to keep in mind about the SAVE Plan.

Pros

• Lower monthly payments: Your monthly payment will likely be lower on the SAVE Plan.
• Loan balance won't grow: Although interest will accrue on your loan, keeping up with your monthly payments means you'll never see your loan balance grow.
• Potentially faster path toward loan forgiveness: If you stick with your payments, you could see your loan balance forgiven in as few as 10 years.

Cons

• Legal uncertainty: For now, it's unclear how the SAVE Plan will move forward.
• No credit toward forgiveness during forbearance: While in the SAVE Plan's general forbearance, you don't get credit toward Public Service Loan Forgiveness or income-driven repayment forgiveness.
• No payment cap: Unlike the PAYE and IBR repayment plans, there's no monthly payment cap for the SAVE Plan. This means if your income goes up, you could pay more than what you'd pay under the Standard Repayment Plan.

SAVE Plan vs. other income-driven repayment plans

The SAVE Plan isn't the only income-driven repayment plan out there. Here's how these features stack up against other options:

SAVE Plan vs. PAYE

Under the Pay As You Earn (PAYE) Plan, your monthly payment is set at 10% of your discretionary income, which is calculated by subtracting 150% of the federal poverty line for your family size from your adjusted gross income (AGI). After making payments for 20 years, you may qualify for loan forgiveness.

In contrast, the SAVE Plan subtracts 225% of the federal poverty line for your family from your AGI. For undergraduate loans, the monthly payment represents 5% of your discretionary income. If you have both undergraduate and graduate loans, it's a weighted average between 5% and 10% of your discretionary income. Additionally, the SAVE Plan allows for forgiveness after as few as 10 years of payments.

However, while there's a cap for monthly payments under the PAYE Plan (if your income goes up, your payment will never be higher than what you'd pay under the Standard Repayment Plan), the SAVE Plan doesn't have this cap.

SAVE Plan vs. IBR

Under the Income-Based Repayment (IBR) Plan, monthly payments are 10% of your discretionary income if you borrowed after July 1, 2014, and your repayment term is 20 years. If you borrowed before that date, your monthly payments are 15% of your discretionary income, and your repayment term is 25 years.

The IBR Plan also offers the same monthly payment cap as the PAYE Plan.

SAVE Plan vs. ICR

Under the Income-Contingent Repayment (ICR) Plan, your monthly payment is either 20% of your discretionary income or what you'd pay on a fixed payment plan with a 12-year repayment term, adjusted to your income (whichever is less). After 25 years, you can qualify for loan forgiveness.

Like SAVE, the ICR Plan doesn't offer a payment cap.