The "Savings Opportunity and Affordable Repayment Act" introduces a new income-contingent student loan repayment plan, known as the Savings Opportunity and Affordable Repayment (SOAR) plan, under the Higher Education Act of 1965. This plan aims to make student loan repayment more affordable by adjusting monthly payments based on a borrower's income and family size. It will be available for eligible federal student loans, including those under Parts B and D of the Act, starting 180 days after the bill's enactment.

Under the SOAR plan, borrowers will have a $0 monthly payment obligation if their adjusted gross income is at or below 250 percent of the poverty line. For income above this threshold, payments are capped at 5 percent of discretionary income for undergraduate loans and 10 percent for other eligible loans, such as graduate loans. The bill also specifies that if the calculated monthly payment is less than $5, it becomes $0, and if it's between $5 and $10, it becomes $10.

A significant feature of SOAR is its provision for loan cancellation. Borrowers repaying only undergraduate loans (or consolidation loans of only undergraduate loans, with attendance not exceeding two years) can receive forgiveness after 120 qualifying monthly payments, equivalent to 10 years. For all other eligible loans, forgiveness is granted after 180 qualifying monthly payments, or 15 years. Qualifying payments include actual payments, $0 payments, and various deferment and forbearance periods.

The bill also mandates that the Secretary of Education will not charge accrued interest that is not covered by the borrower's monthly payment obligation, and any unpaid principal will be deferred. Borrowers can elect to terminate repayment under SOAR at any time and switch to another eligible repayment plan. Eligibility for SOAR will be determined annually through income verification, with provisions for recalculation if a borrower's financial circumstances change.

Furthermore, this legislation phases out new enrollments in certain existing income-contingent plans. After two years from enactment, new borrowers will no longer be able to enroll in the Pay As You Earn (PAYE) Repayment Plan or the standard Income Contingent Repayment (ICR) plan. Borrowers already in these plans can continue, but cannot re-enroll if they switch to a different plan, though the ICR plan's eligible loans are expanded to include certain PLUS loans for dependent students.