Savings Opportunity and Affordable Repayment Act

Key Points

• This bill creates a new income-based student loan repayment plan called the Savings Opportunity and Affordable Repayment (SOAR) plan. Borrowers earning below 250% of the federal poverty level would owe $0 per month, while those earning more would pay 5% of income above that threshold for undergraduate loans and 10% for graduate loans.
• The plan stops unpaid interest from piling onto a borrower's balance. If a borrower's monthly payment is not enough to cover all the interest, the government will not charge the leftover interest to the borrower's account. This means loan balances will not grow over time even when payments are small.
• Borrowers with loans only from two-year undergraduate programs could have their remaining balance canceled after 10 years (120 payments). Those with any other type of federal student loan, including graduate school debt, would qualify for forgiveness after 15 years (180 payments).
• Older repayment plans like Pay As You Earn (PAYE) and the standard Income Contingent Repayment (ICR) plan would be phased out. Current borrowers on those plans could stay on them, but two years after the law takes effect, no new borrowers could enroll, and anyone who leaves those plans could not come back.
• Married borrowers who file taxes separately, or who are separated or cannot access their spouse's income, can have their payments calculated based only on their own income and loan debt. The Department of Education must automatically track each borrower's progress toward forgiveness and cancel loans without requiring an application.