Understanding the SAVE Program – Student Loan Repayment Options

Understanding the SAVE Program: Student Loan Repayment Options: In this episode of “Ask the Hammer,” Jeffrey Levine, aka The Hammer, reviews the SAVE program, a new form of income-driven repayment (IDR) option for student loans. Jeffrey explains that the SAVE program is generally superior to existing IDR options for several reasons.

Understanding the SAVE Program: The Saving on a Valuable Education (SAVE) Plan is the newest income-driven repayment (IDR) plan. Like other IDR plans, the SAVE Plan calculates your monthly payment amount based on your income and family size. In addition, the SAVE Plan has unique benefits that will lower payments for many borrowers. The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan. Borrowers on the REPAYE Plan automatically get the benefits of the new SAVE Plan. Income-driven repayment (IDR) plans are helpful options for student loan recipients who need more manageable monthly payment amounts. With the Saving on a Valuable Education (SAVE) Plan, families and individuals with low or middle incomes will typically have lower monthly payments compared to other IDR plans. You can apply for the SAVE Plan now.

On all IDR plans, monthly payment amounts are based on your income and family size, which can lower your payments to as low as $0 per month. Depending on your situation, IDR plans—including the SAVE Plan—might or might not be the best choice for you. Read about available repayment plans and use available resources, such as the student loan calculator Loan Simulator, to evaluate your situation and find the best repayment option for you. Loan servicers are another helpful resource for figuring out your best option for repayment.

To help you understand the benefits of the SAVE Plan and choose the right repayment plan option for you, here are six things you should know:

There are different repayment options to research before choosing the SAVE Plan.

Big updates are coming to IDR plans in July 2024.

The government interest subsidy on the SAVE Plan helps if you have low monthly payments.

Income exemption and discretionary income changes lead to lower monthly payments on the SAVE Plan.

Use the IDR application to apply for the SAVE Plan.

Your IDR application takes time to process.

While the SAVE Plan is a good option for most borrowers, it’s not the best option for everyone. If you’re trying to pay your loans off in a shorter period of time or if you’re aiming to pay only a certain amount over time, then the SAVE Plan may not fit with your repayment goals. The SAVE Plan doesn’t always give you a lower monthly payment amount. In some cases, if you have a higher income, you might have a lower monthly payment amount on the Standard Repayment Plan. Your total principal balance, income level, and loan type will determine whether the SAVE Plan is your best option.

Watch this video to help with understanding the SAVE Program and fine more episodes of Ask The Hammer on FinStream at this link: https://www.finstream.tv/videos/ask-the-hammer/