BREAKING NEWS! The SAVE Repayment Plan for Student Loan Borrowers is Being Removed…

There is some major breaking news in the world of college financial aid and student loans that was just announced by the U.S. Department of Education. In their newest announcement, they revealed that a proposed settlement agreement was made for a Biden-era administration student loan repayment plan known as SAVE (Saving on Valuable Education) to come to an end. 

This is an announcement that will affect millions of Americans around the country with regard to their student loans, and we have talked about it before in a past blog. We want to take some time to help you better understand this story and what it means for you.

In this blog, we will break down the story based on what the SAVE plan did for you, and how you can find other student loan repayment plans to take over for it.

Breaking Down the News and Major Details

To help us break down this news, we want to bring in our very own Jeff Boron to explain it from his point of view, thanks to a podcast interview he did. He’s a certified college planning specialist who runs Send Your Kids to College and has worked with thousands of students here in Buffalo and WNY with their college education and any topic regarding student loans. Listen below!

https://www.audacy.com/podcast/a-new-morning-d0a21/episodes/biden-era-save-plan-is-going-away-heres-what-it-means-for-your-student-9de69

One of the first statements from Jeff is this:

“The biggest challenge is that 7.5M students signed up for SAVE, and for over a year, they have been in forbearance, which means they have not made payments. With SAVE no longer a thing, they will now have to make those payments and find a new plan.”

Forbearance is essentially when something and nothing happen all at the same time for your student loans. It acts as a twofold process that will still increase interest and add up more for what you pay while simultaneously allowing you to have a temporary pause on paying for it. Doing this is a financial decision that comes with planning and knowing where you are with money, and when and how much you are able to pay. This news might make that harder for people now…

Jeff touches on what this means now that the forbearance period is over and what the next steps are to take, where he says:

“The forbearance period is over, and people will need to go onto the federal student loan website and see what’s available. There’s a tool on the website that allows them to model what the new repayment would be on another plan to sign up for. The new plan will result in a higher monthly payment than if they were under SAVE.”

So even though you will have to find another repayment plan, you will still be charged more for a higher monthly payment now that you are out of the SAVE plan. The model that Jeff mentions is what’s called a Loan Simulator, and it’s a very helpful tool that you will need to use to reevaluate how much you will pay and when!

Once you’re done using the loan simulator to help formulate a plan of what to do next, you will then have to choose a new repayment plan, and Jeff clarifies what those are saying:

“Long term, one of two plans is to sign up for a standard repayment plan, which is a 10-25 year repayment, and the second plan is called RAP, or Repayment Assistant Plan, and that will be the only income-based repayment plan that will last after these changes are done to SAVE. 

Some of the options that Jeff mentions in this interview also tie directly to another part of the federal student loan website, which goes into detail about these repayment plan options. Whichever option you pick will depend on your financial situation, and this page will help you get a better idea of what works best.

Student Loan News FAQ

How do I keep up with news surrounding changes to my student loan repayments? 

One of the final points that Jeff makes is that this news is something that might not reach everyone in time for them to find out and make changes as quickly as possible before they make their next repayment. He says that it will most likely take several months for everyone to be notified of this change, and we want to make sure you are up to date immediately and know all the most important details before making any decision with your student loans.

Give that podcast episode with Jeff a listen, do your research, and please come to us with any other questions you might have by reaching out through our contact form. It’s the best way to get in contact with us, and we will be there right when you need it.