Savings Opportunity and Affordable Repayment Act
Key claim: The Savings Opportunity and Affordable Repayment Act would create a SOAR income-driven student-loan repayment plan with $0 payments up to 250% of FPL, 5%/10% discretionary-income rates for undergrad/other loans, 50% payment-to-principal allocation, and forgiveness after a maximum repayment period.
Abstract
(S1220 · 119th Congress) Savings Opportunity and Affordable Repayment Act This bill creates a new income-driven repayment plan for student loans called the Savings Opportunity and Affordable Repayment (SOAR) plan. The SOAR plan has similar provisions to, but further expands on, the Department of Education’s (ED’s) final rule published on July 10, 2023, that created the Saving on a Valuable Education (SAVE) plan. The SAVE plan was blocked by federal courts. The bill directs ED to carry out a SOAR plan program that complies with specified requirements. The bill allows all federal student loan types to be eligible for repayment under the SOAR plan, including Parent PLUS Loans and Federal Family Education Loans. Under the SOAR plan, a federal student loan borrower whose income is at or below 250% of the federal poverty level (FPL) has $0 monthly payments. A borrower whose income is over 250% of the FPL pays 5% of their discretionary income on loans obtained for undergraduate study and 10% of their discretionary income for all other outstanding loans (e.g., loans obtained for graduate study). Additionally, under the SOAR plan, holders of eligible federal student loans (e.g., ED or private lenders) must apply 50% of the borrower’s monthly payment toward outstanding principal. The other 50% must be applied in the following order: (1) accrued charges and collection costs on the loan, (2) outstanding interest, and (3) outstanding principal. ED must forgive any loan balance that remains outstanding after a specified maximum repayment period (e.g., 10 years or 15 years). Latest action (2025-04-01): Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Why this matters
SOAR is one of the first legislative attempts to codify a successor to the court-blocked SAVE income-driven repayment plan, with more generous terms (higher FPL protection, lower discretionary-income rates, and a 50% principal-allocation guarantee) extended across all federal loan types. For borrowers, it would meaningfully lower monthly obligations and accelerate payoff and forgiveness timelines; for the federal student loan system, it signals a Democratic policy anchor as Congress debates repayment architecture post-SAVE and post-OBBBA.