The SAVE plan (Saving on a Valuable Education) is an income-driven repayment (IDR) plan for federal student loans. It calculates your monthly payment based on your income and family size, not your total loan balance. This plan can lower payments for many borrowers and offers a path to loan forgiveness after 10 to 25 years of qualifying payments.
SAVE replaced the REPAYE plan and became available to borrowers in 2023. As of August 2026, the SAVE plan is still an option, but some features are being reviewed by the courts. This article explains how SAVE works, who can use it, and how it compares to other IDR plans.
How Does the SAVE Plan Work?
Under the SAVE plan, your monthly payment is based on your discretionary income. Discretionary income is the difference between your adjusted gross income (AGI) and 225% of the federal poverty guideline for your family size. This is a higher income exclusion than older IDR plans, which used 150% of the poverty line.
For undergraduate loans, the payment is 5% of discretionary income (down from 10% under REPAYE). For graduate loans, the rate is 10%. If you have both undergraduate and graduate loans, your payment is a weighted average of the two rates.
Interest does not accrue faster than your payment covers. If your monthly payment is $0, your loan balance will not grow due to unpaid interest. This is a major benefit for low-income borrowers.
Who Is Eligible for SAVE?
- You must have federal Direct Loans (subsidized, unsubsidized, or PLUS loans made to graduate students).
- You cannot have defaulted loans.
- You must be willing to recertify your income and family size each year.
- Parent PLUS loans are not eligible for SAVE, but you can consolidate them to access other IDR plans.
How to Apply for SAVE
You can apply online through the Federal Student Aid website. The application asks for your income, family size, and tax information. You can also apply by submitting a paper application to your loan servicer. After you apply, your servicer will calculate your payment and notify you of the amount.
SAVE Plan vs. Other Income-Driven Repayment Plans
There are several IDR plans available to federal student loan borrowers. The table below compares SAVE with the other main options.
| Plan | Payment Rate | Forgiveness Term | Interest Subsidy |
|---|---|---|---|
| SAVE | 5% (undergrad) or 10% (grad) of discretionary income | 10 years for loans under $12,000; 20-25 years for larger balances | Yes, covers unpaid interest |
| PAYE | 10% of discretionary income | 20 years | Yes, but only on subsidized loans for the first 3 years |
| IBR | 10% or 15% of discretionary income | 20 or 25 years | No |
| ICR | 20% of discretionary income or fixed payment | 25 years | No |
SAVE often results in lower monthly payments because of the higher income exclusion and lower rate for undergraduate loans. For borrowers with small loan balances, SAVE can shorten the forgiveness timeline to 10 years.
Current Status of the SAVE Plan in 2026
As of August 2026, the SAVE plan is still open for applications. However, a federal court has blocked parts of the plan, including the provision that forgives loans under $12,000 after 10 years. The Department of Education is appealing the decision. Borrowers already in SAVE are in an interest-free forbearance while the court case continues.
If you are considering SAVE, you should check the Federal Student Aid website for the latest updates. You can also contact your loan servicer to ask about your options. The situation may change, so it is important to stay informed.
Actionable Tips for Borrowers
- Recertify your income on time each year to avoid payment increases.
- Use the loan simulator tool to estimate your payment under different plans.
- Keep records of your payments and any forbearance letters.
- If you have Parent PLUS loans, explore other IDR options after consolidation.
Pros and Cons of the SAVE Plan
Pros
- Lower monthly payments for many borrowers.
- No interest accrual if your payment covers the monthly interest.
- Forgiveness after 10 years for borrowers with small balances (if the rule is upheld).
- Married borrowers can file taxes separately to exclude spousal income.
Cons
- Graduate loans have a higher payment rate (10%).
- You may pay more over time if your income rises.
- Forgiven amounts may be taxed as income (unless the tax exclusion is extended).
- Court challenges create uncertainty about the plan’s future.
How to Decide if SAVE Is Right for You
Compare your estimated payment under SAVE with other plans. If you have a low income or high family size, SAVE may be the best option. If you have a high income, you might prefer a standard repayment plan to pay off your loans faster. Use the Federal Student Aid loan simulator to see your options.
Consider your long-term goals. If you plan to work in public service, you might qualify for Public Service Loan Forgiveness (PSLF) after 10 years of qualifying payments. SAVE can be combined with PSLF, but you must work for a qualifying employer and make 120 qualifying payments.
Summary
The SAVE plan is a valuable tool for managing federal student loan payments. It bases your payment on income and family size, offers an interest subsidy, and can lead to forgiveness. However, the plan is currently under legal review, so stay updated. Always compare your options and choose the plan that fits your financial situation. If you are unsure, contact your loan servicer for personalized advice.
Frequently Asked Questions
What is the SAVE plan for student loans?
The SAVE plan is an income-driven repayment plan that calculates your monthly payment based on your income and family size, and it can offer loan forgiveness after 10 to 25 years.
Who qualifies for the SAVE plan?
Borrowers with federal Direct Loans who are not in default and who are willing to recertify their income and family size each year are eligible for the SAVE plan.
How do I apply for the SAVE plan?
You can apply online through the Federal Student Aid website or by submitting a paper application to your loan servicer.
Is the SAVE plan still available in 2026?
Yes, the SAVE plan is still open for applications, but some parts are blocked by a court order, so you should check the Federal Student Aid website for updates.
Does the SAVE plan forgive loans after 10 years?
The SAVE plan includes a provision to forgive loans under $12,000 after 10 years, but this part is currently blocked by a court and may change.
