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May 21, 2024

Find out if you qualify for Saving on A Valuable Education plan

Some New Yorkers may be eligible for a new loan repayment plan as the end of the pandemic-related student loan pause quickly approaches. The first part of the Saving on A Valuable Education, or SAVE,

Some New Yorkers may be eligible for a new loan repayment plan as the end of the pandemic-related student loan pause quickly approaches.

The first part of the Saving on A Valuable Education, or SAVE, plan rolled out last week and replaces the current Revised Pay As You Earn program.

Borrowers will see their total payments per dollar borrowed fall by 40%, the U.S. Department of Education said, and 85% of community college borrowers will be debt-free within 10 years as a result of the changes. This move comes in addition to flexibility on the length and timing of payments that have been rolling out from the Biden administration, including grace measures to prevent someone being reported to credit agencies if they miss a payment.

New York has the 7th highest average student debt in the country, according to Chamber of Commerce, with over two million borrowers having an average debt of over $37,000.

Do you have additional questions about paying off student loans? Scroll to the bottom of this story or click here to connect with us.

Through SAVE, like REPAYE and other income-driven repayment plans, the amount borrowers pay back is based on their income and family size, according to the department, but the revisions will provide the lowest monthly payments of any plan available to nearly all student borrowers.

Additional changes will be made in July 2024, which will cut payments on undergraduate loans in half and forgive the remaining balance for borrowers with original principal balances of $12,000 after making 10 years of payments.

Borrowers who are 75 days late on their payment will also be automatically enrolled into the plan if they have agreed to allow the Department of Education to access their tax information.

Borrowers who participated in the REPAYE program will be automatically enrolled in the SAVE plan, which applies to those with:

However, there are limitations to the new plan, including many or all loans made to parents being ineligible for this program.

Any loans currently in default fall under the ineligible category too, but if you qualify for the Fresh Start Initiative, you can get your loans back in good standing and choose a type of payment plan to repay your loans.

Borrowers looking to apply for the SAVE plan who aren't already enrolled in the REPAYE program, can visit studentaid.gov.

If you do not have internet access or need a paper version of the application, a PDF copy of the Income-Driven Repayment Plan Request form is available to be printed out and mailed to your loan holder.

Most borrowers who applied by mid-August will have their new monthly payment reflected in their September billing statement ahead of their first payment in October.

Those who apply closer to their servicer's bill issue date or before the required payment due date will be placed in forbearance status for the upcoming billing cycle. This also applies if — because of timing — the application can't be processed before the bill issue date.

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Emily Barnes is the New York State Team Consumer Advocate Reporter for the USA TODAY Network. Contact Barnes at [email protected] or on Twitter @byemilybarnes. To get unlimited access to the latest news, please subscribe or activate your digital account today.