The Saving on a Valuable Education plan is the newest income-driven repayment plan available to federal student loan borrowers, and this summer it's getting even more affordable.

Currently, monthly payments on the SAVE plan are calculated as 10% of borrowers' discretionary income. That's the difference between your adjusted gross income and 225% of the federal poverty line, which is $33,885 a year for individuals in 2024, according to the Department of Health and Human Services. 

But in July, the payments will drop to 5% of discretionary income for borrowers with undergraduate debt currently on the SAVE Plan, an Education Department spokesperson confirmed to CNBC Make It. The change will begin with their first payment due date in July.

How much borrowers could save

In 2023, a single undergraduate borrower who earns $60,000 a year would owe $227 a month toward their loans, according to ED's calculation. On the same income, their payment would drop to about $109 a month in July.

If interest has accrued on your loans in excess of your monthly payment, the government will cover the rest. If $50 in interest accumulates on your loans in a month, but your payment is only $30, you won't be charged the additional $20. 

If you have undergraduate and graduate school loans, your payment will be a weighted average between 5% and 10% of your discretionary income based on the original balances of the loans. Borrowers with only graduate school loans will still have to pay 10% of their discretionary income. 

Borrowers who stay on the SAVE plan can have their remaining balances forgiven in as little as 10 years of repayments. 

All federal student loan borrowers with direct loans are eligible to apply for the SAVE plan through their loan servicer. You can also use Federal Student Aid's loan simulator tool to see if it's the right repayment plan for you. 

Why smaller payments matter

Since payments resumed in October, many federal student loan borrowers have had trouble keeping up with their monthly payments. More than 1 in 3 borrowers said they wouldn't be able to make their loan payments in six months, a March survey from the Student Debt Crisis Center found.

Others planned to make compromises, like the 66% of borrowers who said they'd have to reduce their retirement savings in order to cover their student debt, per a survey from Allianz Life from the end of 2023.

As of late February, 40% of borrowers hadn't started or resumed making payments since the paused ended, according to a survey by Embold Research sponsored by SoFi.

Borrowers may be missing payments for a variety of reasons, with 58% of borrowers saying financial strain has made it difficult for them to resume or start making payments on their loans, the survey found.

But many borrowers could lower their monthly payments if they knew about their repayment options. While 60% of borrowers are at least somewhat knowledgeable about IDR plans, more than 1 in 5 borrowers don't know about the different plans available, Embold Research found.

Want to be a successful, confident communicator? Take CNBC's new online course Become an Effective Communicator: Master Public Speaking. We'll teach you how to speak clearly and confidently, calm your nerves, what to say and not say, and body language techniques to make a great first impression. Sign up today and use code EARLYBIRD for an introductory discount of 30% off through July 10, 2024.

Plus, sign up for CNBC Make It's newsletter to get tips and tricks for success at work, with money and in life.