Female student fanning money saved for student loans for payment plan

Can I Lower My Student Loan Payments Through the New SAVE Plan?

If you’re among the millions of individuals in the U.S. who have student loans, you should know about the Biden Administration’s new student loan repayment plan: the Saving on a Valuable Education (SAVE) Plan.

This blog will explain what is the SAVE Plan, how it may lower your monthly student loan payments, and how you can apply for the SAVE Plan.

What is the SAVE Plan?

The SAVE plan is the newest income-driven repayment (IDR) plan for student loans. “Income-driven” means that your monthly payment is calculated based on your income and household size.

The SAVE Plan lowers payments for almost all eligible borrowers compared to other federal IDR plans because payments are based on a smaller portion of your income.

Will the SAVE Plan lower your monthly student loan payments?

The SAVE Plan offers multiple new benefits for borrowers that may lower your monthly payments.

StudentAid.gov provides information to help you calculate your new monthly payment amount under the SAVE Plan. This can help you decide if the SAVE Plan is the right choice for you.

The SAVE Plan provides the following benefits that may lower your monthly payment. These changes went into effect summer 2023:

  • Increased income exemption: Your monthly payment amount is based on your discretionary income, which is the difference between your adjusted gross income and 225% of the federal poverty level ($32,800 for an individual in 2023).
    • This means that if your income level is $32,800 or below, your monthly payment will actually be $0.
    • Previous IDR plans used an income exemption of 150% of the poverty line. This means that all borrowers have a greater amount of income that will be excluded when calculating their required monthly payment.
  • Interest benefit: If you make your full monthly payment, the government will cover the rest of the interest that accrues that month. This means that your balance will not grow due to unpaid interest as long as you make your full monthly payment. This change eliminates 100% of the remaining monthly interest on both subsidized and unsubsidized loans.
  • Excludes spouse’s income if filing taxes separately: If you are married and you and your spouse file taxes separately, your spouse’s income will not be included as part of the total income used to determine your monthly payment amount. Previously, on the REPAYE plan, spousal income was included. This change may lower your monthly payment and also simplifies your loan application process as your spouse no longer needs to cosign your IDR application.

The government has also announced benefits that are planned to go into effect in July 2024. These additional benefits will likely reduce payments further. To stay updated on these changes, check StudentAid.gov.

Are you eligible for the SAVE Plan?

Any borrower with eligible federal student loans, including both subsidized and unsubsidized loans, can enroll in the SAVE Plan. Defaulted loans are not eligible for repayment under any of the IDR plans.

The SAVE Plan replaces the Revised Pay As You Earn (REPAYE) Plan. If you were on the REPAYE Plan, you will automatically be switched over to the SAVE Plan. Other IDR plans, such as Pay As You Earn (PAYE) and income-contingent repayment, will be eliminated. Borrowers currently on these plans will be able to stay on them, but you will not be able to enroll or re-enroll if you leave these plans after July 1, 2024.

How do you apply for the SAVE Plan?

If you were already enrolled in the REPAYE Plan, you are automatically transferred to the SAVE Plan. You do not need to take any additional steps. Your monthly payments will be automatically adjusted to the new SAVE plan. You can check what plan you are on by logging onto StudentAid.gov. Then go to your My Aid page, scroll down, and view your loans and repayment plans.

If you are on a different plan, you can enroll in the SAVE Plan by submitting a new IDR application. The application should take about 10 minutes. Make sure you have your necessary documents, including your (and, if applicable, your spouse’s) Social Security number, recent tax returns, and any documentation related to your student loans.

Where can I learn more about managing student loans?

Whether it’s about getting information about your loan, understanding your options, deferring your loan payments, or finding possible financial help, Triage Cancer is here to help. Start with our free Quick Guide to Managing Student Loans to learn more.

For more information about Managing Finances after cancer, check out our resource hub.

About Triage Cancer

Triage Cancer is a national, nonprofit providing free education to people diagnosed with cancer, caregivers, and health care professionals on cancer-related legal and practical issues. Through eventsmaterials, and resources, Triage Cancer is dedicated to helping people move beyond diagnosis.

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