What is the SAVE Plan?

The Free Application for Federal Student Aid (FAFSA) is offering a repayment plan known as The Saving on Valuable Education (SAVE) plan that will replace the REPAYE plan and significantly reduce monthly payments for students who need to borrow money.

What is the SAVE plan?

• The SAVE plan replaces the Revised Pay As You Earn (REPAYE) plan and will be effective as of February 2024.?
• It is an income-driven repayment (IDR) plan, meaning it will calculate monthly payments based on your family size and income.?
• It increases the income exemption cut-off from 150%-225% of the poverty line meaning that it will decrease your monthly payments if you fall under that cut-off. This plan will use your discretionary income (the difference between your adjusted gross income and? 225% of the poverty line) to determine monthly payments. For instance, if your discretionary income is $0 then your payment is $0.
• It will not charge you monthly interest for subsidized and unsubsidized loans if you pay your scheduled payment in full. This will stop your balance from growing since the government will cover the interest.
• It does not require students (who are married) to include their spouse’s income. It will only use your income to determine monthly payments so long as you file separately from your spouse. This change makes it so that more students fall within the poverty line cut-off which helps to reduce their monthly payments.

To apply, visit the official Federal and Student Aid website linked here. Students on the REPAYE plan will automatically be enrolled on the SAVE plan, the changes will be visible before your next payment due date. If you applied for the SAVE plan either too close to your bill date or payment due date then you’ll be placed in a forbearance status until your application is processed. To see which loans are eligible or calculate your monthly payment visit the SAVE plan website.

Written by Soledad Miguel-Mendez, Well-Suited's PR Coordinator

Sources

?Federal Student Aid. (n.d.). The Saving on a Valuable Education (SAVE) Plan Offers Lower Monthly Loan Payments [Review of The Saving on a Valuable Education (SAVE) Plan Offers Lower Monthly Loan Payments]. Studentaid.gov; studentaid.gov. Retrieved March 13, 2024, from https://www.mybib.com/tools/apa-citation-generator