Having student loans is holding back so many Americans from achieving their dreams. However, programs are available that reduce student loans' burden
Having student loans is holding back so many Americans from achieving their dreams. However, programs are available that reduce student loans’ burden on your finances. One of these programs is the Saving on A Valuable Education (SAVE) income-driven repayment (IDR) plan. Around 4 million student loan borrowers are enrolled in this plan. Here are some frequently asked questions about this student loan repayment option.
What is the SAVE Plan?
The SAVE plan is an income-driven repayment (IDR) plan, replacing the Revised Pay As You Earn (REPAYE) Plan.
According to Federal Student Aid, “The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.”
How Does SAVE Calculate How Much I Have to Pay?
SAVE calculates your monthly payment amount based on your income and family size.
Under the SAVE Plan, according to the US Department of Education, a single borrower who makes less than $15 an hour is not required to make payments.
That means you won’t have to repay your loan if you’re making $32,800 or less or a family of four earning $67,500 or less.
These numbers will be higher in Alaska and Hawaii.
However, if you make over that amount, you’d save more than $1,000 yearly on your payments compared to other IDR plans.
If you’re worried about interest, we have good news. Under the SAVE Plan, your balance won’t grow due to unpaid interest if you keep up with your payments.
What Loans Qualify for the Save Plan?
According to Federal Student Aid, the following loans qualify:
- Direct PLUS Loans (graduate or professional students)
- Direct Consolidation Loans that did not repay any PLUS loans made to parents
- Direct Subsidized Loans,
- Direct Unsubsidized Loans
Some loans, such as the Federal Perkins Loans, must be consolidated before being eligible for this plan. Check the complete list of loans that need to be consolidated at the Federal Student Aid website.
Which loans are ineligible for the SAVE Plan?
According to Federal Student Aid, the following loans are ineligible for the SAVE Plan:
- Any loan that is in default
- FFEL Consolidation Loans that repaid PLUS loans made to parents
- Direct PLUS Loans made to parents
- Direct Consolidation Loans that repaid PLUS loans made to parents
- FFEL PLUS Loans made to parents
How Do I Apply for the SAVE Plan?
If you’re in the REPAYE Plan or recently applied, you will be automatically enrolled in the SAVE Plan.
If you’re not, you can apply here and select the option that lets you pay the least monthly amount.
When is the Deadline to Apply?
According to CNN, you’ll be able to apply on an ongoing basis. However, you’re being encouraged to apply as soon as possible. That’s because you’ll be required to make a payment in October 2023.
Is the SAVE Plan Right For Me?
If you’re eligible, you may wonder if the SAVE plan is the best for you.
CNN says income-driven plans such as the SAVE plan can help you if you’re having problems making monthly payments. However, these plans may cause you to pay more in the long run.
CNN says, “if a repayment plan lowers monthly payments, it may also increase how much is paid back over time due to interest and extend how long it takes to pay the loan off. It may not be the best option for everyone.”
Next Steps
Fortunately, other options are available if the SAVE Plan isn’t right for you.
If you need help navigating student loan forgiveness, we recommend our Student Loan Forgiveness Workshop.
This workshop is designed especially for Federal student loan borrowers like you, helping you navigate the path to forgiveness with your Department of Education loans.
Our team of experts will walk you through the latest updates, timelines, and deadlines, empowering you with the knowledge you need to make the right decisions.
We cover other forgiveness programs such as Borrower Defense Claim, School Closure Forgiveness, New Income-Driven Programs (IDR), and more.
Download now and get access to a 2.5-hour video workshop hosted by your very own Shante R. Roddy and a 68-page presentation slide deck.
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