How the SAVE Plan Can Help Lower Your Monthly Student Loan Payments

If you’re paying back student loans, the Saving on a Valuable Education (SAVE) Plan, which rolled out in summer 2023, could save you money.

This new student loan repayment plan calculates your student loan payments based on your income and family size. It lowers student loan payments for just about everyone who qualifies for it, compared to other repayment plans based on your income.

The SAVE Plan replaces the Revised Pay As You Earn (REPAYE) plan, so if you’re on the REPAYE Plan, your loans automatically switch over to the SAVE Plan. If you’re not on the REPAYE Plan, you can apply for the SAVE Plan and other income-driven repayment plans at studentaid.gov.

Benefits of the SAVE Plan

Here’s how you could benefit from the SAVE Plan. The SAVE Plan student loan income limits are higher. The government increased the amount  you can qualify for the plan from 150% to 225% of the poverty level. That level varies based on the size of your family.

People who make under $32,800 per year, or about $15 per hour full-time, will have monthly payments of $0 on SAVE Plan student loans. The U.S. Department of Education estimates that more than 1 million people qualify for a $0 payment. People who make more than that will save at least $1,000 per year compared to the REPAYE Plan. Many people will see their loan payments cut in half.

With the SAVE Plan, unpaid interest won’t increase the balance on your loan. For example, if your monthly payment is $30 and your interest is $50, you won’t be charged the $20 difference. Other plans add this interest to your balance. So, the amount you owe could grow even if you were making your payments on time every month.

Additionally, if you are married and file your income taxes separately, your spouse’s income won’t count toward your income, and your spouse doesn’t have to sign your application. That’s another change from the REPAYE Plan.

In July 2024, the SAVE Plan intends to roll out more benefits:

• Lower payments for undergraduate loans.
• Forgiveness for some loans in 10 years.
• Progress toward loan forgiveness, even if you consolidate your student loans.
• Credit for forbearance and deferments.
• Automatic enrollment after you’re 75 days late with your payment.

What Types of Loans Are Eligible Under the New Student Loan Repayment Plan?

You can enroll in the SAVE Plan with:

• Direct Subsidized Loans
• Direct Unsubsidized Loans
• Direct PLUS Loans made to graduate or professional students
• Direct Consolidation Loans that did not repay any PLUS loans made to parents

You can enroll with these loans if you combine them in a direct consolidation loan:

• Subsidized Federal Stafford Loans (from the FFEL Program)
• Unsubsidized Federal Stafford Loans (from the FFEL Program)
• FFEL PLUS Loans made to graduate or professional students
• FFEL Consolidation Loans
• Federal Perkins Loans

These loans are not eligible:

• Direct PLUS Loans made to parents
• Direct Consolidation Loans that repaid PLUS loans made to parents
• FFEL Program Loans (some types can become eligible if consolidated)
• Federal Perkins Loans (can become eligible if consolidated)
• Any loan that is currently in default. If your loans are in default, you may be able to enroll for free in the Fresh Start Initiative. 

Don’t Go At It Alone

Paying for college is a significant investment, and understanding your options is key to reducing your costs. Your Farm Bureau agent can help you review your finances and create a plan for managing your student loans while working towards your financial future.