Biden-Harris Administration Launches Most Affordable Repayment Plan Ever, Transforming Income-Driven Repayment by Cutting Undergraduate Payments in Half and Preventing Unpaid Interest Accumulation

The Biden-Harris Administration today announced that it has fully launched its updated income-driven repayment application tool on StudentAid.gov and that student loan borrowers can now officially enroll in the Saving on A Valuable Education (SAVE) plan, the most affordable repayment plan ever created. The plan is part of President Biden and Vice President Harris' broader efforts to make college more affordable and support students and borrowers. Already, the Biden-Harris Administration has approved the cancellation of more than $116 billion in student loan debt for 3.4 million borrowers – and the new SAVE plan will save millions of borrowers money on their monthly payments.

Additionally, the U.S. Department of Education (Department) is announcing a nationwide outreach campaign called "SAVE on Student Debt" in collaboration with leading grassrootsorganizations. "SAVE on Student Debt" will leverage strategic partnerships across public, private, and nonprofit sectors to support borrowers by ensuring they take full advantage of the benefits provided by the SAVE plan in addition to the existing resources and debt forgiveness programs available from the Department.

"Starting today, millions of borrowers can reduce their monthly student loan bills by enrolling in the SAVE plan, the most affordable repayment plan in history," said U.S. Secretary of Education Miguel Cardona. "The SAVE plan is another huge step forward in President Biden's tireless efforts to fix the broken student loan system, reduce the burden of student debt on working families, and put borrowers first. SAVE isn't just about helping borrowers today, it's about creating a more affordable pathway for millions of aspiring students who dream of earning college degrees and achieving the American dream—that's exactly what the Biden-Harris Administration has fought to do since day one."

"The SAVE plan is a sea change for students, making college loans far more affordable than ever before," said Under Secretary James Kvaal. "It will cut payments to zero for borrowers making roughly $15 an hour, save all other borrowers at least $1,000 a year compared to other income-driven repayment plans, and stop runaway interest that leaves folks owing more than their initial loan. We are launching the 'SAVE on Student Debt' campaign in partnership with leading grassroots groups across the country to help as many borrowers as possible enroll in the SAVE plan and get additional support and resources for their federal loans."

Under the SAVE plan, a single borrower who makes less than $15 an hour will not have to make any payments, and borrowers earning above that amount would save more than $1,000 a year on their payments compared to other IDR plans. The SAVE plan also ensures that borrowers never see their balance grow due to unpaid interest as long as they keep up with their required payments. Additionally, the new IDR application takes just 10 minutes or less to complete, and it allows borrowers to choose to have their income accessed securely from the Internal Revenue Service and automatically recertified every year, so most do not need to reapply annually. This new feature will prevent borrowers from missing their required annual IDR recertification.

Borrowers applying for the SAVE plan will see their new payment amount before submitting their application, and it will be displayed on their servicer's website when their first bill is sent. Most borrowers who apply for the SAVE plan in the coming days can expect to have their new monthly payment amount for their first payment in October. After borrowersapply, they can check the status of their application by visiting their account dashboard on StudentAid.gov. Borrowers who are currently enrolled in the REPAYE plan will automatically have their monthly payments adjusted to the new SAVE plan before payments restart.

In the coming days, the Department and our servicers will reach out directly to nearly 30 million borrowers to invite them to use the new IDR application to apply for the SAVE plan. This is part of the Department's robust outreach campaign to provide information and resources to borrowers to support them when the payment pause ends this fall. The Department has already been in direct touch with 43 million borrowers and will continue to coordinate with servicers and outside partners to provide additional high-quality communications with specific, actionable information directly to borrowers.

Estimated benefits of the SAVE Plan

The benefits of the SAVE plan will be particularly critical for low- and middle-income borrowers, community college students, and borrowers who work in public service. Overall, the Department estimates that the plan will have the following effects for future cohorts of borrowers compared to the REPAYE plan:

More than 1 million additional low-income borrowers will qualify for a $0 payment.
70% of borrowers who were on IDR plan before the payment pause would stand to benefit from the SAVE plan's new provision that borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest.
Borrowers will see their total payments per dollar borrowed fall by 40%. Borrowers with the lowest projected lifetime earnings will see payments per dollar borrowed fall by 83%, while those in the top would only see a 5% reduction.
A typical graduate of a four-year public university will save nearly $2,000 a year.
A first-year teacher with a bachelor's degree will see a two-third reduction in total payments, saving more than $17,000, while pursuing Public Service Loan Forgiveness.
85% of community college borrowers will be debt-free within 10 years.
On average, Black, Hispanic, American Indian and Alaska Native borrowers will see their total lifetime payments per dollar borrowed cut in half.

Leveraging Strategic Partnerships to Support Borrowers and Promote SAVE Plan

To help ensure borrowers are able to take full advantage of resources available from the Department, the Biden-Harris Administration is launching a nationwide outreach campaign called "SAVE on Student Debt" in partnership with leading grassroots organizations. This public-private partnership builds upon the robust direct outreach underway from Federal Student Aid and loan servicers by leveraging strategic partnerships across public, private, and nonprofit sectors to support borrowers and ensure they take full advantage of the benefits provided by the SAVE plan. This partnership will be led by the Department in collaboration with Civic Nation, the National Association for the Advancement of Colored People (NAACP), the National Urban League (NUL), Rise, the Student Debt Crisis Center, UnidosUS, and Young Invincibles.

To support borrowers and ensure the millions of Americans who can benefit from the SAVE plan are enrolled, the Department and their campaign partners will hold a SAVE on Student Debt Week of Action in September, which will include the following actions:

Civic Nation will engage its nationwide network of community-based organizations to facilitate enrollment in the SAVE plan and will host a relational organizing training to empower individuals to share information about the SAVE plan with their friends, family, and communities.
The National Association for the Advancement of Colored People (NAACP) will mobilize their young advocates to assist borrowers enrolling in the SAVE plan, and will host briefing and trainings for members at state conventions this fall.
The National Urban League will host an event for its nationwide movement of affiliates – including affiliate CEOs, members of the Urban League Young Professionals, and Urban League Guild members – that will cover upcoming changes for student loan borrowers.
Rise will reach out to its community of 250,000 students, alumni and supporters by hosting phonebanks, textbanks, and in-person and virtual townhalls across 100+ college campuses to share how the SAVE plan will directly impact borrowers and their communities.
The Student Debt Crisis Center will reach out to its two million supporters to host workshops and will train their ambassador network on peer-to-peer outreach around the SAVE plan.
UnidosUS will mobilize its national network of affiliates, allies, and supporters through a targeted social media campaign to ensure the Latino community is aware of the SAVE plan and other student loan resources.
Young Invincibles will provide timely and accurate information to young adults about the SAVE plan by hosting townhalls and information sessions, virtually and in-person, and will continue to amplify young adult voices and experiences about the enrollment process.

If an organization is interested in participating in the SAVE on Student Debt Week of Action, they can sign up at SaveOnStudentDebt.org.

Building on an Unparalleled Record of Debt Relief

The SAVE plan builds on the work the Biden-Harris Administration has already done to improve the student loan program, make higher education more affordable, and approvemore than $116 billion in targeted relief for 3.4 million student loan borrowers, including:

$39 billion for 804,000 borrowers through fixing historical inaccuracies in the IDR payment count system for borrowers who earned forgiveness;
$45.7 billion for 662,000 public servants through improvements to PSLF;
$10.5 billion for 491,000 borrowers who have a total and permanent disability; and
$22 billion for nearly 1.3 million borrowers who were cheated by their schools, saw their schools precipitously close, or are covered by related court settlements.

The Biden-Harris Administration remains committed to making college more affordable and ensuring student debt is not a roadblock to attaining a college degree or credential, or planning for the future. The Administration has made the largest increase to Pell Grants in a decade and has charted a course to double the maximum Pell Grant and make community college free to enhance college affordability and reduce unnecessary student debt. The Administration is also holding institutions accountable for unaffordable debts, and recently proposed regulations that would set standards for earnings and debt outcomes for career program while enhancing transparency for all programs to give students the information they need to make informed choices.