(March 13, 2024) We are excited to share with you some valuable information regarding a new initiative aimed at alleviating the financial strain of student loans.
Introduced by the U.S. Department of Education last August, the SAVE Plan is a groundbreaking income-driven repayment (IDR) program designed to provide significant relief to borrowers. Tailored to offer the lowest monthly payments among IDR plans, SAVE adjusts payments based on income and family size, while increasing the income exemption to 225% of the federal poverty line.
Here's what you need to know about the SAVE Plan:
Lower Monthly Payments: SAVE calculates payments on a smaller portion of one’s income, resulting in lower monthly payments for most borrowers. This is particularly beneficial for low and middle-income earners, public service workers, community college graduates, and those who originally borrowed $12,000 or less in student loans.
Payment Reductions: Starting in July, borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their discretionary income. Those with both undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income based on the original principal balances of their loans.
Financial Relief: SAVE provides $0 monthly payments for individuals earning $32,800 or less or families of four earning $67,500 or less, offering significant annual savings for others.
Loan Forgiveness: Borrowers enrolled in SAVE who took out $12,000 or less in loans for college and have been in repayment for 10 years or more will have their remaining balances forgiven. Additionally, there's an extra $1,000 forgiveness for each additional year of payments, up to a maximum of 20 or 25 years.
Additionally, borrowers can benefit from SAVE’s lower monthly payments and interest subsidy while also pursuing loan forgiveness through the Public Service Loan Forgiveness (PSLF) Program. After the equivalent of 120 qualifying payments, PSLF forgives Direct loans for those in qualifying public service jobs, which includes work for the government or 501(C)(3) non-profit organizations.
We encourage you to explore the benefits of the SAVE Plan and see how it can help ease your student loan burden. For more information and assistance with enrollment, please visit the U.S. Department of Education's official website.