SAVE Plan
What Is the SAVE Plan?
SAVE Plan (Saving on a Valuable Education) is a federal student loan repayment plan that replaced REPAYE and enhanced income-driven repayment benefits.
It calculates payments based on a percentage of discretionary income, often lower than prior plans.
SAVE is designed to reduce unpaid interest growth and make repayment more affordable.
Why It Matters
SAVE Plan:
- May lower required payments to as little as 5% of discretionary income for certain borrowers
- Prevents unpaid interest from compounding in many cases
- Offers forgiveness after qualifying repayment periods
SAVE aims to reduce long-term balance growth for lower-income borrowers.
How SAVE Plan Works
SAVE Plan calculates monthly payments based on discretionary income and family size.
Example: A borrower earning $35,000 may qualify for significantly reduced payments compared to standard repayment.
If the calculated payment does not cover monthly interest, the government may cover remaining interest under program rules.
Borrowers must recertify income annually.
SAVE Plan vs. Other IDR Plans
SAVE Plan → Lower percentage and enhanced interest protection
Other IDR Plans → Higher income percentage formulas
Program design focuses on affordability.
FAQs About SAVE Plan
Who qualifies for SAVE?
Eligibility applies to most Direct Loan borrowers.
Does SAVE stop interest growth?
It limits unpaid interest accumulation under certain conditions.
Can SAVE lead to forgiveness?
Qualifying payments may result in forgiveness after required timeframes.
Related Terms
