Research Report The SAVE Plan for Student Loan Repayment
Which Fields and Colleges Benefit Most?
Jason D. Delisle, Jason Cohn
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The Biden administration launched a new income-driven repayment (IDR) plan for federal student loans this year called Saving on a Valuable Education (SAVE). The plan cuts 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 will benefit from the new SAVE plan, this report uses College Scorecard data to examine loan repayment patterns for more than 25,000 postsecondary programs. We find the following:

  • The new benefits in the SAVE plan are effectively limited to borrowers from undergraduate programs and are largest for those with certificates and associate’s 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’s degrees will typically repay 69 percent. We estimate the typical borrower in both groups would typically repay in full under prior IDR options.
  • 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). If we exclude programs likely to fail a new quality assurance rule (gainful employment) the Biden administration has proposed, the highest loan forgiveness rate will occur at public two-year institutions.
  • 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 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.

Student loans—and loan forgiveness—will become a more central part of how the federal government finances higher education as a result of the SAVE plan. Our findings suggest that in many cases, undergraduate students could be encouraged to take on federal student loans and err on the side of borrowing more. That will require a major change in how policymakers, students, and colleges approach student debt. Institutions may also use the SAVE plan to underwrite low-quality programs where graduate earnings are consistently low. Policymakers may need to consider new quality assurance measures in response. As the SAVE plan is set to provide larger benefits to a broader set of borrowers and may even encourage many students to take on student debt, policymakers must ensure the program is administered in an efficient and fair manner.

Research Areas Education
Tags Higher education Paying for college Racial equity in education
Policy Centers Center on Education Data and Policy