Is the REPAYE Plan the Same as the SAVE Plan?

Federal student loan income-driven repayment (IDR) plans offer borrowers a path to manage their monthly payments based on their financial circumstances. Among these options, the Revised Pay As You Earn (REPAYE) plan was a significant choice for many. The Saving on a Valuable Education (SAVE) plan has since been introduced, building upon and enhancing the framework established by REPAYE. This article explores the relationship between these two plans and highlights their key differences, providing clarity for borrowers navigating federal student loan repayment.

Understanding the Relationship

The SAVE plan is the successor to REPAYE, evolving income-driven repayment options. It was designed to replace REPAYE and offer more advantageous terms for federal student loan borrowers. Existing REPAYE borrowers were automatically transitioned to SAVE, requiring no action.

The SAVE plan retains REPAYE’s core principle: monthly payments based on income and family size. It incorporates improvements to reduce monthly payments and prevent loan balances from increasing due to accrued interest. This transition makes federal student loan repayment more manageable and affordable.

Comparing Key Features

REPAYE and SAVE differ in payment calculation, interest accrual, spousal income treatment, and forgiveness timelines. These differences often result in more favorable outcomes under SAVE.

For payment calculation, SAVE significantly alters the percentage of discretionary income used. REPAYE required 10% of discretionary income, while SAVE reduces this to 5% for undergraduate loans. Graduate loans remain at 10%, and mixed loans use a weighted average based on original principal balances. SAVE’s definition of discretionary income is more generous, exempting 225% of the federal poverty guideline compared to REPAYE’s 150%. This can result in significantly lower monthly payments, or even $0 payments for lower incomes.

SAVE’s approach to interest accrual and subsidy is a key improvement. Under REPAYE, unpaid interest could accrue and be added to the principal, causing loan balances to grow. In contrast, SAVE eliminates 100% of remaining interest for subsidized and unsubsidized loans after a scheduled payment, if the payment doesn’t cover accrued monthly interest. This means a borrower’s loan balance will not increase due to unpaid interest, even with a $0 payment.

Spousal income treatment for married borrowers also differs. Under REPAYE, a spouse’s income was typically included in payment calculation, regardless of joint or separate tax filing. SAVE excludes spousal income from payment calculation for married borrowers filing separately. This provides greater flexibility and potentially lower payments. Spouses are no longer required to co-sign IDR applications under SAVE.

Loan forgiveness timelines also adjust under SAVE. REPAYE offered forgiveness after 20 years for undergraduate loans and 25 years for graduate loans. SAVE introduces a faster path for smaller original balances. Under SAVE, borrowers with original balances of $12,000 or less can have loans forgiven after 10 years of payments. For each additional $1,000 borrowed above $12,000, the timeline increases by one year, up to a maximum of 20 years for undergraduate loans and 25 years for graduate loans.

Eligibility and How to Apply

Understanding SAVE eligibility and application is important for federal student loan borrowers. SAVE is generally available to most federal student loan borrowers, with specific loan types eligible.

Most federal student loans are eligible for SAVE, including Direct Subsidized, Unsubsidized, and PLUS Loans (for graduate/professional students), and Direct Consolidation Loans (excluding Parent PLUS). FFEL Program and Federal Perkins Loans can also become eligible if consolidated into a Direct Consolidation Loan (excluding Parent PLUS). There is no specific income limit; eligibility and payment amounts are based on discretionary income, calculated using adjusted gross income and family size.

To apply for or switch to SAVE, borrowers typically use StudentAid.gov. The process involves submitting an Income-Driven Repayment (IDR) Plan Request. During the application, borrowers provide financial information, including income and family size.

Borrowers can consent for the Department of Education to access federal tax information directly from the IRS, streamlining applications and annual recertifications. If current income is significantly lower than the most recent tax return, borrowers can self-report income and provide alternative documentation like recent pay stubs. After submitting, borrowers typically receive a confirmation, followed by a review to determine their new payment amount.

What This Means for Borrowers

The SAVE plan offers federal student loan borrowers more affordable payments and improved interest management. These changes can alleviate financial pressure for many.

SAVE’s redesigned payment calculation can lead to significantly lower monthly payments, especially for undergraduate loans. This reduction frees up financial resources, allowing borrowers to manage other expenses or work towards other financial goals. For low-income individuals, the enhanced discretionary income calculation can result in $0 monthly payments, providing immediate relief.

A key benefit of SAVE is its mechanism to prevent loan balances from growing due to accruing interest. By eliminating interest not covered by the monthly payment, SAVE ensures a borrower’s principal balance does not increase, even with minimal or $0 payments. This protection prevents loan balances from growing despite consistent payments.

Borrowers on other IDR plans (PAYE, IBR, ICR) may find reasons to switch to SAVE. Lower undergraduate loan payment percentages, comprehensive interest subsidy, and flexible spousal income rules often make SAVE the most financially advantageous option. However, borrowers should compare their situations using tools like the Loan Simulator on StudentAid.gov to determine the most suitable plan.

Borrowers on any IDR plan, including SAVE, must annually recertify income and family size to maintain their payment amount. This ensures monthly payments accurately reflect a borrower’s current financial situation. While SAVE has faced recent legal challenges, resulting in some borrowers being placed into administrative forbearance with interest accrual restarting on August 1, 2025, understanding its intended benefits remains important for future planning and potential policy changes.