This year, the Biden administration launched a new income-driven repayment (IDR) plan for federal student loans called Saving on a Valuable Education (SAVE). The plan reduces borrowers’ monthly payments compared with current IDR plans, provides earlier loan forgiveness for smaller debts, and prevents unpaid interest from accumulating.
To better understand how borrowers from different degree programs and higher education institutions might benefit from the new SAVE plan, this report from the Urban Institute uses College Scorecard data to examine loan repayment patterns for more than 25,000 postsecondary programs. Among the findings:
- The new benefits in the SAVE plan are effectively limited to borrowers from undergraduate programs and are largest for those with certificates and associate degrees. The plan is unlikely to increase benefits for the typical graduate borrower.
- Borrowers who complete certificates and use the SAVE plan will typically be required to pay back just 35 percent of their original principal balances. Borrowers who complete associate degrees will typically repay 69 percent.
- The highest loan forgiveness rate will occur at for-profit institutions (74 percent of programs result in the typical borrower having some of their debt forgiven), and the lowest will occur at four-year programs at public institutions (34 percent).
- Among large undergraduate fields, programs in the liberal arts and the humanities, psychology, medical assisting, and teacher education will see the largest reductions in the shares of borrowers fully repaying their loans. Registered nursing, finance, and engineering fields will see the smallest reductions.
- Payment reductions and larger loan forgiveness benefits under the SAVE plan will occur broadly across racial and ethnic groups but are skewed toward programs enrolling more Black and Hispanic students.