Savings Opportunity and Affordable Repayment Act

This bill would establish the Savings Opportunity and Affordable Repayment (SOAR) plan, a new income-driven repayment option for all federal student loan types, including Parent PLUS and Federal Family Education Loans. Under the plan, borrowers with incomes at or below 250% of the federal poverty level would qualify for $0 monthly payments, while those above that threshold would pay between 5% and 10% of their discretionary income depending on the loan type. The proposal also requires that half of a borrower's monthly payment be applied directly to the loan principal and mandates that the Department of Education forgive any remaining balances after a repayment period of 10 to 15 years.

This bill affects federal student loan borrowers, specifically those with undergraduate or graduate study loans, including Parent PLUS Loans and Federal Family Education Loans. The Department of Education and private lenders who hold eligible federal student loans are also affected by new requirements for applying monthly payments and forgiving remaining balances. Additionally, the bill impacts borrowers with incomes at or below 250% of the federal poverty level through the establishment of $0 monthly payment provisions.

• Establishment of the Savings Opportunity and Affordable Repayment (SOAR) plan. The bill creates a new income-driven repayment plan for federal student loans that expands upon previous repayment frameworks.
• Broadened loan eligibility. All federal student loan types are eligible for the SOAR plan, including Parent PLUS Loans and Federal Family Education Loans.
• Income-based payment thresholds. Borrowers with incomes at or below 250% of the federal poverty level qualify for $0 monthly payments. Those above this threshold pay 5% of discretionary income for undergraduate loans and 10% for other outstanding loans.
• Mandatory payment allocation requirements. Loan holders must apply 50% of a borrower's monthly payment directly toward the outstanding principal. The remaining 50% is applied to accrued charges, collection costs, interest, and then any remaining principal.
• Loan forgiveness timeline. The Department of Education is required to forgive any remaining loan balances after a specified maximum repayment period, such as 10 or 15 years.

The bill establishes the Savings Opportunity and Affordable Repayment (SOAR) plan, which expands upon and incorporates provisions from the Department of Education's Saving on a Valuable Education (SAVE) plan rule published on July 10, 2023. It modifies repayment structures for existing federal student loan types, including Parent PLUS Loans and Federal Family Education Loans.

The bill aims to establish the Savings Opportunity and Affordable Repayment (SOAR) plan, a new income-driven repayment program for federal student loans designed to expand upon previous repayment models. The plan seeks to provide more affordable repayment options by adjusting monthly payments based on income levels, applying a portion of payments directly to loan principal, and offering loan forgiveness after specified repayment periods.