If You Have a Student Loan, You Might Not Have to Pay Much, Despite the Supreme Court's Loan Forgiveness Decision

Mark Hake

On June 30, 2023, the Supreme Court ruled against loan forgiveness. The Biden Administration's plan to discharge some or all of federal student loan debt was turned by a 6 to 3 decision against it by the Supreme Court.

As a result, the student loan pause will end on Sept. 1, 2023.

But all is not lost, if you are a student loan holder. For example, the Biden Administration has come out with a revised plan on July 7. It's called a SAVE plan, which stands for "Saving on a Valuable Education."

The SAVE Plan

The U.S. Department of Education says borrowers can enroll in this plan and potentially get a much-reduced loan payment amount.

The reason is this is part of its income-driven repayment (IDE) regulatory authority. The prior IDE plan was called REPAYE (Revised Pay As You Earn). Those who previously enrolled in the REPAYE plan will now be automatically enrolled in the SAVE plan.

The bottom line is that if you make less than 225% of the Federal Poverty Guidelines (FPL), up from 150% in the REPAYE plan, you don't have to pay anything.

This change means a single borrower who earns less than $32,805 a year ($67,500 for a family of four) will not have to make payments.

According to CNBC, it will cut borrowers’ monthly payments in half and will leave many people with a $0 monthly bill.

However, most of these new regulations will not go into effect until 2024. Nevertheless, the new SAVE plan reduces borrowers' required payments from 10% under the REPAYE plan to just 5% of discretionary income.

As a result, more than 1 million additional low-income borrowers will qualify for a $0 payment, including 400,000 who are already enrolled in the REPAYE plan.

Moreover, there won't be any monthly interest on the amounts not covered by the borrower’s payment on the SAVE plan. As a result, borrowers who pay what they owe on this plan will no longer see their loans grow due to unpaid interest.

The student loan pause ends on Sept. 1, 2023, but the SAVE Plan regulations will not go fully into effect until July 1, 2024. Borrowers can check on these new regulations and the application process as they come out.


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Mark R. Hake, CFA, writes articles on national and local news, stocks, and market events at Kiplinger.com, Barchart.com, Medium.com, and Newsbreak.com as well as TalkMarkets.

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Mark Hake is a financial analyst, investor, and Chartered Financial Analyst (CFA). He writes about US and foreign stocks as well as cryptos, hedge funds, and private equity. He previously ran his own hedge fund, investment research firm, and acted as CFO for a fintech startup. He focuses on finding value, arbitrage, and hidden asset opportunities.

Phoenix, AZ

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