The SAVE Plan is the newest income-based repayment plan for your student loans. It looks at how much money you make and how big your family is to calculate your monthly payments. And guess what? It offers the lowest monthly payments out there for almost all student borrowers.
The SAVE Plan is slashing monthly payments by raising the income exemption from 150% to 225% of the poverty line. If you’re making less than $32,800 a year, you might not have to pay anything each month. And even if you make more, you’ll likely save some serious cash compared to other plans.
Unlike other income-based repayment plans, if your calculated payment amount is smaller than your interest payment, your loan balance won’t grow. So, you won’t feel like you’re taking one step forward and two steps back.
Oh, and if you’re married and file your taxes separately, your spouse’s income won’t be factored in. No need for your partner to cosign your repayment plan.
Applying for the SAVE Plan is pretty easy. If you’re already on the REPAYE Plan, you’ll automatically get on the SAVE Plan soon. No extra paperwork needed. But if you’re on a different repayment plan, you can apply now.
The SAVE Plan covers several types of loans, including Direct Subsidized Loans, Direct Unsubsidized Loans, and certain Direct Consolidation Loans. Some loans might need to be consolidated to qualify.
So, the SAVE Plan is all about making loan repayment easier and cheaper for you. It’s like a breath of fresh air for student borrowers!
There are some potential downsides to be wary of.
Big Government Bill: Some folks are worried about how much this plan could cost the government—like, potentially hundreds of billions of dollars. That’s a lot of taxpayer cash, and it might raise questions about whether it’s sustainable in the long run.
Policy Whiplash: Remember, education policies can change with each new government. The future of the SAVE Plan and its perks could depend on political support, and that can be shaky ground.
Slack on Payments: Critics argue that forgiveness and interest perks might make borrowers less motivated to make bigger payments or clear their loans quickly. That could mean longer repayment times.
Bottom line: Before diving into the SAVE Plan, it’s essential to weigh the pros and cons based on your own financial situation and goals. And always stay in the loop about any changes in the program or broader student loan policies.