Savings Opportunity and Affordable Repayment Act

The Savings Opportunity and Affordable Repayment Act creates a new income-driven repayment plan for federal student loan borrowers, replacing the current Pay As You Earn and Income Contingent Repayment plans. Under this plan, monthly payments are calculated as 5% of income above 250% of the federal poverty line (with a minimum $0 or $10 payment), and 50% of each payment reduces principal while interest accrues only on unpaid balances. Borrowers qualify for full loan forgiveness after 120 payments (10 years) for undergraduate-only loans or 180 payments (15 years) for other eligible loans. The plan applies to borrowers with eligible federal loans and takes effect 180 days after enactment.