S-1220 — Savings Opportunity and Affordable Repayment Act

YourVoice.Now Summary

Your MoneyTransparency & Accountability

Would cap federal student loan bills at 5-10% of income and cancel what is left after 10 or 15 years.

Your Money

Half of each payment — goes straight to your balance

Half of every payment must go to the balance itself, whatever fees or interest are owed. The other half covers fees first, then interest, then the balance.

Monthly bill after missed paperwork — jumps to 10-year standard amount

You would have to confirm your income once a year. If the paperwork is late, the Department would move you to a plan billed like a 10-year payoff of your current balance.

Parent PLUS borrowers — gain an income-based payment option

Parents who borrowed for a child's schooling could enroll in the new plan. These Parent PLUS loans are shut out of most income-based plans today.

Monthly loan bills — $0 for income under 250% of poverty line

Your bill would be figured only on income above 250% of the federal poverty line. If none of your income clears that mark, you would owe $0, and those months would still count toward cancellation.

Undergraduate loan payments — 5% of income over 250% of poverty

Debt you took on for a bachelor's or associate degree would be billed at 5% of the income above that mark. That is half the rate used for graduate debt.

Graduate loan payments — 10% of income over 250% of poverty

Debt for law school, medical school, or any other graduate program would be billed at 10%. If you hold both kinds, the two rates are blended by how much you borrowed for each.

Unpaid interest charges — balance stops growing while you pay

Right now, unpaid interest can pile up. A balance can grow even when you pay on time. This plan would bar that charge.

Leftover loan debt — cancelled after 10 or 15 years

With two years or less of undergraduate school, you would be clear after 120 payments. Others would be clear after 180. The Department would cancel the debt with no application.

Two older repayment plans — closed to new borrowers after two years

The PAYE plan and the older income-contingent plan would close to new borrowers two years after the law passed. People already in them could stay, but could not rejoin after switching out.

Transparency & Accountability

Written payment explanations — sent to each borrower every year

The Department would send you a notice with your payment amount and how it was worked out. It would also say how to ask for a new figure if your income or family size changed.

More about this bill

If you owe federal student loans, a new plan would set your monthly bill from your income. You would owe nothing while your income stays under 250% of the federal poverty line. Above that line, undergraduate loans would cost 5% of the extra income. Graduate loans would cost 10%. If you hold both kinds of debt, the two rates would be blended by how much you borrowed for each. The plan would open 180 days after the bill became law. Half of every payment would go straight to what you still owe. Interest your payment does not cover would not be charged to your account. Your balance would stop growing while you keep paying. Anything left after 15 years of payments would be wiped out. The wait would be 10 years for borrowers who spent two years or less in undergraduate school. Months with a $0 bill would count toward that total. So would months of unemployment, military service, or cancer treatment. You would have to confirm your income once a year. You could let the IRS send it, or mail proof yourself. If you miss that step, your bill would jump to the standard 10-year amount. You could ask for a new figure any time your pay drops. Parents who borrowed for a child could use the plan too. Two older repayment plans, PAYE and ICR, would close to new borrowers after two years.

Congressional Summary

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).

Legislative Subjects

Family relationshipsGovernment lending and loan guaranteesHigher educationStudent aid and college costsTax administration and collection, taxpayersWages and earnings

Details

Congress: 119th
Chamber: Senate
Status: summarized
Action: Introduced in Senate
Action Date: 2025-04-01
Date Added: 2026-03-30
Source: Congress.gov →

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