Got student loans? Here’s why you should look into the SAVE Plan.

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By Crystal Harlan

April 4, 2024

The best part of the SAVE plan, is that regardless of what your monthly payment amount is, after a certain number of years, the remaining balance will be forgiven. 

The Biden-Harris administration launched the SAVE program in 2023, calling it the “most affordable repayment plan ever created.”

The SAVE plan is an income-driven repayment (or IDR) plan. That means it calculates your payments based on your income and family size instead of your loan balance. If you have undergraduate loans your, payments will be reduced from 10% to 5% of your discretionary income. If you have undergraduate and graduate loans, your payment will be somewhere between 5% and 10% of your discretionary income. Some borrowers may even see monthly payments drop to as low as zero.

In addition, the Department of Education will stop charging any monthly interest not covered by your payment on the SAVE plan so you won’t see your loans grow due to unpaid interest. 

The best part of the SAVE plan, is that regardless of what your monthly payment amount is, after a certain number of years, the remaining balance will be forgiven. 

If your original principal balance was $12,000 or less, you’ll receive forgiveness after 120 payments (that’s equivalent to 10 years in repayment). For each additional $1,000 borrowed above that level, the plan adds an additional 12 monthly payments for up to a maximum of 20 or 25 years.

The SAVE Plan replaces the existing Revised Pay As You Earn (or REPAYE) Plan. If you are a borrower on the REPAYE Plan, you will automatically get the benefits of the new SAVE Plan and do not need to reapply or request to change your plan.

If you are not already on the REPAYE plan, and want to switch over to the SAVE plan, visit studentaid.gov/idr

 

RELATED: 78,000 public service workers get student loans canceled by Biden administration

 

 

Author

  • Crystal Harlan

    Crystal is a bilingual editor and writer with over 20 years of experience in digital and print media. She is currently based in Florida, but has lived in small towns in the Midwest, Caracas, New York City, and Madrid, where she earned her MA in Spanish literature.

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