What to know about the SAVE plan, the income-driven plan to repay student loans

More than 75 million student loan borrowers have enrolled in the U.S. government's newest repayment plan since it launched in August.

President Joe Biden recently announced that he was canceling federal student loans for nearly 153,000 borrowers enrolled in the plan, known as the SAVE plan. Forgiveness was granted to borrowers who had made payments for at least 10 years and originally borrowed $12,000 or less.

The SAVE plan was created last year to replace other existing income-based repayment plans offered by the federal government. More borrowers are now eligible to have their monthly payments reduced to $0, and many will qualify for lower payments compared to other repayment plans.

For Lauran Michael and her husband, the SAVE plan has reduced student loan payments by half.

Since getting married, they've both been paying off her husband's student loans, which would have amounted to about $1,000 a month when payments resumed after a pause during the pandemic. Under the SAVE plan, their payments are now $530 a month.

“We don't want our loans dictating our life choices, and us not being able to do other things because we're paying so much money. The SAVE plan is definitely a game changer for us,” said Michael, a 34-year-old interior designer in Raleigh, North Carolina.

Michael's family is paying for daycare for their two children using the money they saved from not making payments during the pandemic and the reduced payments under the SAVE plan.

If you are interested in applying for the SAVE plan, here's what you need to know:

WHAT IS AN INCOME-DRIVEN REPAYMENT PLAN?

The U.S. Education Department offers several plans for repaying federal student loans. Under the standard plan, borrowers are charged a fixed monthly