Important Update – September 2025: The SAVE Plan is suspended due to court rulings. New enrollments are blocked, interest resumed on August 1, 2025, and the program will sunset by 2028.
How the SAVE Calculator Works
The SAVE Plan (a revamped version of REPAYE) bases your monthly payment mainly on your income and family size. It’s designed to give federal student loan borrowers—especially low- and middle-income borrowers—more breathing room and protection from ballooning balances.
Here’s what goes into the calculation:
- Income (AGI): Usually your Adjusted Gross Income (AGI) from your tax return. If the Department of Education can’t pull it automatically, you’ll need to provide proof of income.
- Discretionary Income: This is your income above 225% of the federal poverty line for your family size. SAVE only looks at what’s left after that buffer.
- Undergraduate loans: 5% of discretionary income.
- Graduate or mixed loans: 10% of discretionary income (or a weighted mix if you have both).
- Interest Benefit: If your payment doesn’t fully cover the monthly interest, SAVE covers the rest. That means your balance won’t grow due to unpaid interest, even if your monthly payment is $0.
- Family Size: Includes you, your spouse (if filing jointly), kids (including unborn children due this year), and anyone else you support more than half the year.
- Tax Filing Status:
- Married Filing Jointly: Both incomes are counted.
- Married Filing Separately: Only your income counts, and your spouse is excluded from family size.
- Single: Only your income counts.
- Loan Balance & Forgiveness Timeline:
- Borrowers with $12,000 or less get forgiveness after 10 years of payments.
- Each additional $1,000 in loans adds one more year.
- Max forgiveness period: 20 years (undergrad only) or 25 years (if any grad loans).
Sherpa Tip: This calculator estimates SAVE payments using the fully implemented SAVE calculation. This means that undergraduate and graduate loan balances are needed. Scroll down for more details.
It has been updated to include the new 2025 Federal Poverty Level Guidelines.
SAVE Plan Monthly Payment Examples
The examples below show how SAVE payments were calculated before the program was suspended:
$0 Monthly Payment (2025):
- Single borrower earning $35,213 or less.
- Family of four earning $72,338 or less.
Small Monthly Payment Example:
Say a single borrower earns $36,713 (that’s $1,500 above the $0-payment cutoff).
- Discretionary income = $36,713 – $35,213 = $1,500.
- If only undergrad loans → 5% × $1,500 = $75 per year, or about $6/month.
- Rounded up (SAVE rounds $5–$10 up to $10) → $10/month payment.
Payment Savings Example (225% vs. 150% rule):
- Single borrower at $40,000 income
- 150% FPL cutoff (old rule) for household of 1 = $23,475.
- Discretionary = $40,000 – $23,475 = $16,525 → payment ≈ $69/month.
- 225% FPL cutoff (new rule) = $35,213.
- Discretionary = $40,000 – $35,213 = $4,787 → payment ≈ $20/month.
→ Monthly savings = $49.
- 150% FPL cutoff (old rule) for household of 1 = $23,475.
- Family of 4 at $80,000 income
- 150% FPL cutoff = $48,225.
- Discretionary = $80,000 – $48,225 = $31,775 → payment ≈ $133/month.
- 225% FPL cutoff = $72,338.
- 150% FPL cutoff = $48,225.
Discretionary = $80,000 – $72,338 = $7,662 → payment ≈ $32/month.
→ Monthly savings = $101.
SAVE vs. Other IDR Plans (IBR, PAYE, REPAYE)
SAVE is more generous than older IDR plans, but it’s also under fire. For a full side-by-side comparison, see our IDR comparison guide.
SAVE Plan Eligibility and Rules
Not every loan type qualified for SAVE when it was active:
- FFEL & Perkins Loans: Not eligible unless consolidated into a Direct Loan.
- Parent PLUS Loans: Not eligible for SAVE (or any IDR except ICR). The “double consolidation loophole” briefly helped some borrowers, but that workaround has now been closed.
Note: These rules are provided for reference only. Because of ongoing litigation, no new borrowers can enroll in SAVE. Those already on the plan may remain temporarily, but it will sunset by 2028.
SAVE Plan Interest Subsidy Explained
One of SAVE’s biggest benefits was that it covered 100% of unpaid monthly interest while in repayment—even for borrowers with $0 payments.
This perk ended when interest resumed on August 1, 2025. Borrowers still on SAVE no longer receive this benefit, and no new enrollments are allowed.
For a detailed breakdown, full guide on the SAVE interest subsidy.
Limitations and Legal Challenges to SAVE
Here’s the catch: SAVE is in legal limbo. A federal court has blocked new enrollments, interest resumed on August 1, 2025, and the plan is set to sunset by July 2028. Borrowers will eventually be moved into the new RAP.
Bottom line: SAVE is still active for some borrowers now, but it’s temporary.
FAQs About SAVE and IDR Calculators
Yes. In that case, only your income is counted, and your spouse isn’t added to family size.
No. They aren’t eligible for SAVE or most IDRs (except ICR in limited cases).
Payments are 10% of discretionary income, or blended if you have both undergrad and grad loans.
No, applications closed due to litigation.
Payments continue under old formula, but interest resumed and the plan will sunset by 2028.
No action yet, but plan for RAP.
Final Thoughts
SAVE was one of the most generous repayment options ever created, but it’s suspended and will be phased out. Use this calculator as a reference for how the plan worked, and keep an eye on future repayment programs as details emerge.
For personalized advice, consider talking to a certified financial planner (CFP) who understands student loans.
About the Author
Pedro Gomez is the new Student Loan Sherpa and a Certified Financial Planner™ with over a decade of experience helping clients navigate complex financial decisions. He is the founder of Global Financial Plan, where he writes about international living, geoarbitrage, and strategies for retiring young, and also leads Brickell Financial Group, a registered investment advisory firm focused on accelerating financial freedom.
Pedro is the architect behind the “12 Levels of Financial Freedom” framework and blends student loan strategy with long-term planning, tax efficiency, and investing. His work is especially geared toward upwardly mobile professionals, entrepreneurs, and those looking to design a life beyond the default path.
Pedro is available for strategy sessions and press inquiries.
I have 14 loans. 10 are direct which I can switch to the repaye/save program. 4 are FFEL Stafford loans which i need to do a direct consolidation loan to get them into save. My question is should I consolidate all 14 loans or just the 4 FFEL Srafford loans? Is there any reason why I should do one over the other?
There are a couple of factors to consider.
If you decide to pay off your loans in full at some point, having the debt separate could be to your advantage, as it would allow you to pay off the high-interest loans first.
However, if your loans have different amounts of progress toward forgiveness, combining them all into one loan could be a huge advantage if you do it before 12/31/23.
I’m likely going to go the full 20 years for forgiveness as I’m already 8 years in and don’t see me being able to pay them off in the next 12 years. All my loans have the same amount of payments towards forgiveness applied so far. Just wasn’t sure if there was any other reason for me to not consolidate all of them into one or not.
I’m curious at to what happens to the interest, I recently am taking time off and living abroad for the next couple of years, my source of income is from a rental property and savings. I qualify to pay $0 payments. Does the interest get paid by the Department of Education? If I save up the money I’d normally pay on my payment and wait until I’m employed again to pay one big lump sum, then I wont pay that interest retroactively will I? If I wait till the end of two years, then make a $10,000 payment, how much of that will go towards interest and how much to principle?
You’ve just hit on one of the biggest perks of SAVE. If you qualify for $0 per month payments, which is the case for most people living abroad, your balance won’t grow due to interest. There is a subsidy each month that covers 100% of the unpaid interest. You could make that lump sum payment at the end of two years, and it should go entirely toward the principal balance.
Hi Michael,
I have ~$110,000 in graduate loans and am trying to decide the best approach for paying these down. My 2022 AGI is going to be considerably less than for my 2023 taxes as I started my first job post-grad in late May 2022. I was considering starting on the SAVE plan for the next year as I have been approved based on the 2022 AGI and then switching to a 10-year plan when I would need to recertify. Part of the reason for wanting to start on the SAVE plan is related to wanting to buy my first home next year and how my monthly debt payments affect this/being able to save money for a down-payment. Would this plan (SAVE then standard repayment when needing to recertify income) make sense?
Based on the info you’ve shared, I really like that strategy. Using a lower IDR payment is a great way to help your mortgage application.
The one item I’d add is that you are not committed to paying the minimum. If the SAVE payments are lower than the 10-year plan beyond that first year, you can stick with SAVE for the flexibility. You can even calculate the payment you make so that you eliminate the loan after 10 years. The monthly bill is the minimum, not the max. This flexibility can be really helpful if you buy a home and run into an unexpected repair that needs to be made.
Is there a reason NOT to do the SAVE plan when you’re pursuing PSLF? I have about 4-5 years left to qualify and $84,000 in student loans. My spouse and I file taxes separately and my AGI is probably around 85,000. I do see I will save more money but I feel like it’s too good to be true. I’m currently on the PAYE plan. Thank you.
If you are definitely going to stay in the PSLF job for the full ten years plus, and you have already confirmed employer eligibility, then SAVE is the better option.
If there is a chance you might not complete PSLF, some borrowers with graduate debt might want to stick with PAYE.
I’m lost on what to do, when I enter my spouses income along with mine it makes my payment $900.00 per month which is not doable. Yet, if I enter only my own it’s $0. If we file separately next year we lose some pretty significant child tax credit and daycare credits which we rely on to break even. Is there some other more attractive repayment option aside from SAVE that I’m missing?
SAVE is the best repayment plan for most borrowers, but it is possible that it isn’t the best option in your case. Have you looked into balance-based plans like the 10-year standard repayment plan or the graduated or extended repayment plan? There are shortcomings to these plans, but they may offer a lower payment depending on your loan balance.
As you plot your strategy, I’d also encourage you to think about how you are going to eliminate your debt. Some borrowers focus on forgiveness, and others try to pay it off as quickly as possible. If you just think about the next few months, you might lose the bigger picture and end up spending more money in the long run.
Hi thank you making this.
I have questions on how long this $0 payment will go? I took out graduate loans about $35000, and I am not working but I’m married. We filled tax jointly and my husband makes about $60000 a year. I might not be working for the next 3-4 years. In the calculation, my payment said $0. My question is how does this make my payment be forgiven? My understanding is that with $0 payment, it just puts me on deferment stage until I start working. Hope this makes sense.
I think we have a couple of things to clarify.
First, if your husband is making $60,000 per year and you file jointly, I don’t think you will qualify for $0 per month payments, unless you two are able to lower your AGI considerably.
Second, a $0 payment is much different than a deferment, especially with SAVE. You should check out this article about how $0 payments are better than deferments and move you closer to IDR forgiveness.
BEST student loan information out there, thank you!
Making income-based repayments with an end-goal of significant loan forgiveness has always been part of my student loan plan, at first with PSLF in mind but then with 25 year plan as I did not end up in a qualifying field.
I accrued undergrad loans between 2004-2008 and grad/professional school loans 2008-2012. I started repayment in 2013, consolidated, then kept paying IBR. In 2017-2018 I had additional grad school (+more grad loans) and deferment during that period. In 2019 I switched to REPAYE and started paying again…then COVID forebearance…until now. I am thrilled with the automatic switch to SAVE and the new payment essentially based on my 2019 income for the next year.
What I can’t figure out is where I stand with the total number of payments I have made toward my 25 year end-game. Now I have a new servicer, again, and it has become even murkier. Are you aware of a central location where one can see the total number of (qualifying) payments made?
Also, I am assuming that my 2013 consolidated loans are on a different forgiveness track (~2040?) than my 2017-2018 grad loans (~2043?), but I honestly don’t know for sure. Would you agree they are on their own timelines?
Unfortunately, I’m not aware of a centralized location tracking IDR payment progress. I’m hopeful that after the one-time IDR adjustment happens in 2024, they will start providing this information.
It sounds like your analysis on two timelines is correct, but you might have an opportunity to get them all bumped up to the 2013 consolidated loans track if you consolidate all of the debt again. The rules for consolidation and forgiveness timeline adjustments are tricky, but if you get it done before the end of the year, it could be a great opportunity. I’d encourage you to give your servicer a call to discuss this option.
I have 54,000 in student loans. $42,000 are graduate and $11,500 are Parent Plus. I have applied on studentaid to consolidate and been approved. We have a family of six and our AGI is $100K per year. We pay $6000 per year in medical insurance, $4800 in HSA, $6240 pre year in 401K. I’ve applied for the IDR and it is under review. I keep trying to do various calculators and I’m getting conflicting numbers. Not sure if the calculator on the student aid site is for IDR only or for the actual SAVE plan. I can’t decide if I should just put every available dollar I have towards this student loan just to try to get it paid off or what. I feel so confused!
This situation is pretty complicated because you have your own loans, and you have Parent PLUS loans.
Parent PLUS loans are not eligible for SAVE, and consolidated loans that include Parent PLUS loans are likewise ineligible.
If all of your loans were combined into a single consolidated loan, the debt would only be eligible for the ICR plan.
Borrowers often do what is called a split consolidation, where the graduate loans go into one consolidation loan, and the Parent PLUS loans go into another consolidation loan.
I’d suggest calling your servicer right away to discuss this option and how it might impact your IDR payments.
I’m kinda curious. Is there any way to lower the discretionary income by putting the money into a 401k plan? Does that count at all for the discretionary income?
You can lower discretionary income by putting money into a 401k, and it is a great idea. Putting money into a 401(k) or other retirement plan is a great way to keep your IDR payments lower.
Trying to help my kids figure this out. They are at 21k, 42k and 52k all undergrad loans. If they all did SAVE, 2 of them would be at $0 based on current income and the other about $240. If Im understanding this correctly, the program is 20 years, but are they paying towards the principle or interest? And if they want to make extra payments each month, it goes towards the principle (but if its interest only whats it going towards)? This is confusing. And as before, they can change plan at any time?
I’ll cover the easy question first: they can change plans at any time, subject to the limitations described here.
As for the interest, SAVE comes with an excellent subsidy that will prevent their balances from growing due to interest. Additional payments will reduce the principal balance.
Can you help me understand this too: “However, some borrowers may have incomes so large that other balance-based plans, such as the 10-year standard repayment plan, become more affordable.” Under the 10 yr plan my student making 61k with 44k loan is showing $444/mo on standard plan with total to be paid $53,327. On the new save plan its $235-312/mo with $64,577 total paid in 20 years. Both show $0 forgiveness amount. So the standard plan is actually better for him since its fixed payments over the 10 years (and paid off faster). Whereas the monthly amount on SAVE will increase as salary grows and take 20 years. Am I understanding this correctly? THANK YOU!
Your understanding is correct. By paying less on SAVE, it will cause you to spend more in the long run due to interest.
I’d point out two other details that may also impact your analysis:
1) The repayment estimator assumes that you will get a raise every year. That might not be a reasonable assumption for you, and it could mean that some debt eventually gets forgiven.
2) You can always pay extra. For example, if you sign up for SAVE, you can have a minimum monthly payment of $235, but pay $444 per month with a goal of knocking out the debt in 10 years. The lower minimum payment just gives you some flexibility. I’m a fan of seeking out low minimum monthly payments and strategically paying extra where it makes sense.
So the “base” total (for lack of a better word) that he owes is the $53,327 thats showing on the standard plan (44k loan is showing $444/mo on standard plan with total to be paid $53,327.). If he takes the save and chooses to pay extra per month (ie the $444 he’d pay on the standard) once he hits the $53,327 he is done regardless of how long it takes?
It doesn’t really work like that. The more he pays each month, the smaller the balance will be, and the smaller the interest charges will be. If he pays less, the balance stays larger, and the interest costs go up.
You can use a calculator like this one to see how paying extra impacts how long the debt lasts and how much eventually gets spent.
Thank you, the calculator is a big help. And so are you. I very much appreciate your time and patience answering all my questions!
My pleasure! I’m glad you found it helpful.
Do they answer the coming out of deferment question as yes or no? Do they mean the federal one from the last 3 years? If they said no and submitted is that a problem?
I’m not certain I follow your question, and I don’t want to guess and give you inaccurate information. Are you asking about IDR credit for the past three years or something else?
This is one of the questions when applying for the SAVE plan “Are you currently in a deferment or forbearance” I guess with the federal deferment the last 3 years the answer should be yes? One of my kids put no and submitted it.
I understand your question now. Thanks for clarifying. Picking no shouldn’t be an issue.
Sorry, its forbearance not deferment 🙂
Hi Michael,
I needed some clarification on how the SAVE plan works. Currently I have been approved for the SAVE plan and my current payment is $0. I currently have a little over $200k in graduate loans but was previously in a residency program therefore my AGI was low. With the new SAVE plan, since my monthly payment is $0, does that mean my loans will stay the same without accruing interest and could I just keep making additional payments to bring down the prinicipal while on this repayment plan?
You are correct, Alan.
You might also want to check out this discussion on the best strategy for borrowers who qualify for a SAVE subsidy.
The new SAVE Plan seems to be an Interest Only payment.
If your payment is lower than the interest, they forgive the difference. And if my payment is $0 does that mean I own no interest that month? So how can I pay the principle down?
That is a great observation, Jerri. For some borrowers, SAVE will be an interest-only payment. Those that qualify for $0 payments will essentially have a 0% interest rate during that time.
SAVE is a great choice for people who can’t afford other repayment plans and people working toward loan forgiveness.
However, if your goal is to pay off the loan in full, I’d still argue that SAVE could be a good fit. Suppose you get a $50 per month subsidy. That means your payment plus the $50 subsidy covers all of the interest, but it doesn’t touch the principal. In that situation, you could choose to pay extra each month to knock down the principal. Because paying extra doesn’t cancel out the subsidy, it is a path forward that some borrowers can use.
Thank you. 0% interest is the goal on my 30K loan. Since I am under the 32K agi, live at home rent free. I will sign up for SAVE put my money in a CD or MM acct to earn 5.5% interest and once I am above the 32K AGI and start having a payment and interest, will use my savings to pay down or off my principle. Or I can make additional payments monthly now.
That is a really clever plan. I like it!
I recently retired from my job after 30 years in State government. can you direct me to any information related to PSLF for public service retirees or do you have to be currently employed full time in public service?
Thanks in advance!
Unfortunately, there isn’t a PSLF option for retired public employees. One of the PSLF requirements is that you are currently employed in a PSLF job at the time you apply and at the time forgiveness is granted.
That said, IDR repayment plans like SAVE work very nicely for borrowers in retirement living on social security.
I work for a non-profit that is eligible for PSLF. Would I be able to enroll in the SAVE plan to have my monthly payments lowered, and also enroll in PSFL and have the rest of my amount forgiven after 10 years?
SAVE is a great option for people who are working toward PSLF. Lower payments mean more debt can get forgiven after 10 years!
Just make sure you verify employer eligibility and submit paperwork yearly.
I feel like I’m missing something – if I continue making payments as is, my total amount paid in 10 years is ~$32,000. If I switch to SAVE and pay for 25 years, my total payments are ~$35,000. I don’t see how the SAVE plan is saving me any money in the long run – only reducing my monthly payment but making me pay an add’l 15 years!
That is a great point, Lisa. By lowering your monthly payments, you could end up spending much more in interest on SAVE.
However, I’d note that your monthly student loan bill is the minimum monthly payment. You are allowed to pay extra whenever you like, as there are no prepayment penalties.
Hi Michael,
If I qualify for $0 payments under the new SAVE plan, does that mean my loan is ultimately forgiven after 120 $0 “payments”?
Kind of?
If your total original loan balance is less than $12,000, you could qualify for IDR forgiveness after 10 years. Making $0 payments does count toward IDR forgiveness.
I’d also note that the $0 payments may go up depending on your income. If you get a new job or a big raise, you may have to pay more.
Hi, I currently have $46 and a 20,000 debt. I currently live in a 4 family household and earn 80,000. In the next 3-5 years I should be making 100,000. Would this mean my montly will increase more to the point that I will end up paying more than what I currently own. I am confused on the whole montly payment change. Hope you can answer, thanks
As your income goes up, your monthly payment will also increase. The plan is designed to be affordable for all borrowers, so the ones who earn more will pay more.
Your payments get adjusted each year based on your latest tax return.
Many borrowers will pay off their full balance plus interest. However, they won’t have to pay anything more than that. Additionally, there are no prepayment penalties for the borrowers that wish to pay off their loans faster to spend less on interest.
Great! Do you have a chart that shows how much you will pay based on income and family size. Thanks
I do not. The idea with this calculator is that you can enter your income and family size to get a very accurate estimate. If you want to see how a raise or having a child would impact your payments, you can change the numbers.
I have about $277,000 in non-consolidated graduate loans (6 total loans from 2013-2016). I should have enrolled in PAYE or REPAYE right after school, but went with the old IBR, then switched to PAYE. I’ve heard REPAYE subsidized interest for about the first 3 years a little too late. Right now, I’m having a hard deciding whether to switch from PAYE to REPAYE/SAVE, especially since it seems that we may not be able to switch back as they may be phasing out of PAYE. Figure monthly payments will be nearly the same, but the big difference is 20 vs 25 year forgiveness. At some point, I gave up on the idea of paying off my loans prior to the 20 years because I was making large payments that weren’t even touching the principal due to the accrued interest (6.5% average), and figured I’d inevitably have a very high debt that would be forgiven and taxed, so I went with PAYE because of the 20 year forgiveness. Now, it seems like it might make sense to switch to SAVE for the interest subsidy alone, even if it means I may be in debt for an extra 5 years. I might actually be able to start putting a dent in the principal if I have big years with large bonuses that could be used to pay down the principal under SAVE. What is confusing is that my account seems to suggest that I’m about 65-75% towards my “pay off date.” I’m not sure if that is accurate, but if it is, then it doesn’t seem to make sense to add an extra 5 years towards repayment, right? Any thoughts on whether it makes sense to switch from PAYE to SAVE? I’m trying to decide within the next few weeks.
Thanks!
Your analysis strikes me as spot-on when it comes to evaluating PAYE vs. REPAYE/SAVE.
However, I’m confused by the 65-75% toward your “pay off date.” This nugget of info doesn’t make sense to me in the context of the other information you have provided. Maybe your servicer can offer some clarity on that one? This bit of information might imply there is a significant detail missing in the analysis, but I don’t know what it would be, unless you finished undergrad in like 2006 and still have some federal loans in repayment.
Thanks, Michael!
If we assume that a pay off date of 20-25 years from the original loan disbursement, is there a calculator out there that can help simulate the total amount paid and monthly payments under PAYE vs. SAVE?
The Department of Education has a loan simulator that will do just that. However, keep in mind that using this sort of calculator requires making some assumptions about salary growth.
It’s usually hard to predict your salary in just a couple of years. Estimating what you will be earning in 15 years strikes me as really difficult.
Thanks for the referral to the student loan simulator, Michael. It was very helpful, and it appears that I would pay substantially less in the long run if I stay in PAYE than if I switch to SAVE. One thing I found odd, was the payoff year on my loans from the Dept of Ed loan simulator based on my records. I had switched from the IBR to PAYE around 2019 or 2020 to lower my payments. The student loan simulator currently has my payoff date for the PAYE program for 2040, which is odd considering that I took out my loans from 2013-2016. This suggests to me that when I switched IDR plans the 20-25 year clock started over for me… Is that true? I called Navient before switching to PAYE and they told me that I would not lose out on my prior payments because I wasn’t consolidating. Nobody had told me that the clock would start over if I switched between IDR plans. Now I’m worried that if I switch to SAVE (if I were to choose to do so) the 25 year clock might start over again, this time from 2023. Can you confirm this please? I’m a little worried. Thank you.
The simulator is not very good when it comes to forgiveness timelines. I wouldn’t rely on it for that.
What your servicer told you about switching repayment plans and not restarting progress is accurate. You are not the first borrower with this concern about SAVE. Here are my thoughts on switching to SAVE without restarting progress toward IDR forgiveness.
After completing my undergraduate degree I took one semester of graduate school classes. Does attending graduate school for one semester mean that I added five years to my repayment plan before forgiveness? If so those were three very expensive classes.
In the case of SAVE, it is entirely possible that you did. The 20 vs. 25-year repayment length is especially brutal for people like you.
I’d like to see them treat the graduate debt like they do for payment calculations. If you have mostly graduate debt, you pay close to 10% discretionary income and if you have mostly undergraduate debt, you pay closer to 5%.
For the forgiveness timeline, it is all or nothing. One graduate loan means 25 years until forgiveness. 25 years might seem fair for people with massive law school or medical school debt, but a few grad classes causing the change doesn’t really seem fair.
I don’t know if this will make you feel any better, but when the rules were first announced and up for public comment, I raised this issue, and many readers of the site left public feedback. Had we framed things from your perspective instead of teachers and social workers, the argument might have been a bit stronger.
If my tax return was filed as “single”, but I have a joint filed tax return with my wife. Can I use the single income as the income reported for my SAVE application?
I’m not sure I follow. I’m not an accountant or tax law expert, but my understanding is that taxes are either filed jointly or separately. I don’t understand how you could have a joint return if you filed single. Can you elaborate on what you are asking?
Thank you for this website! I have $90,000 in graduate loans. I’ve been in some form of repayment/deferment/forbearance since 2000. In 2009, I took a federal loan consolidation and I am in the standard loan repayment plan. My payments are $550/month. I used the REPAYE calculator and it says my payments would be about $1000. Should I do nothing and keep the smaller payments which are more suitable for me? Because I consolidated in 2009, does that make any sort of repayment clock restart in 2009?
You should be able to keep your progress from before the consolidation. Check out the details on the IDR count update. Depending on where your count falls, it might be worth it to pay more for an IDR plan if it means your debt can get forgiven.
What income verification are we using? I have a new job which is part time and I’m making considerably less than last year. Are they using the 2022 tax return only?
Great question, Tara.
Typically, the AGI from your most recent tax return is the best approach. However, if your income has dropped since your last tax return, you can use alternative documentation of income. Usually, that means using two recent paystubs. For the restart, however, borrowers are able to self-report their yearly income, so it will be considerably easier for you this time around.
I am very torn between staying on IBR and switching to SAVE.
I understand the benefits to SAVE.
But under IBR my loans should be forgiven in about 7 to 9 years. if i switch to save it will add 5 years to that. However i dont know if i would actually save by switching to SAVE anyways. Is there a comparison calculator that would help understand the outcomes of staying in my current IBR bs switching to SAVE.
and different topic. does the interest rate stay the same IBR or SAVE? or does save lower the interest rate?
Thanks.
I have a few thoughts on this. First, is your repayment plan IBR for new borrowers or the original IBR? If you are a recent graduate who also attended graduate school, it is a tricky decision. If you only have undergraduate debt, or you are on the old version of IBR, SAVE is an easier choice.
I’ve thought about making a comparison calculator for weighing lower payments against earlier forgiveness, but it would require you to project your income over a decade into the future.
One other thought to consider on this particular decision is that you can sign up for SAVE now, and then switch to IBR at a later date. You just have to remember to revisit this question before you have made 60 save payments.
As for the interest rate, that is another tricky question. SAVE doesn’t technically reduce the interest rate. However, it does cover 100% of the monthly unpaid interest via a subsidy. If your loan generates more interest than what you pay each month, the effective interest rate on SAVE would be lower. The borrowers that qualify for $0 payments on SAVE would have an effective interest rate of 0% for those months.
Thank you. It is so much easier understanding you than speaking to my loan company.
I am older IBR with grad and under grad loans payment start date 2011 and 2012. $72k left almost 60k is capitalized interest. if that doesn’t give you heartburn haha
unfortunately I’m like many other Americans who have never missed a payment, payed on time, etc however interest has ballooned the principal payment so high that some of my loans show that i owe more now than i did when i first took the loan. its a scary situation. IE original loan 7k paying into 11 years and principal is at 11k. essentially im paying interest from now on until i die unless forgiveness is really a thing. I know save would stop this from happening now.
I have nothing to lose i could take your advice switch to save and if i see not much of a difference in payments then switch back. 60 payments is a long time. does IBR get phased out eventually because of the save?
If you are on the older version of the IBR plan, which you would have to be based on your loan dates, the switch to SAVE should lower your monthly payments considerably.
I know it’s stressful seeing larger balances than what you originally borrowed, but the purpose of IDR payments and forgiveness is to make loans affordable no matter how much you owe. It doesn’t always work as planned, but you are certainly not alone.
Thanks. I just went to switch to save to try it out. Do you know what this means? Pay Off Date Feb 2041
is this assuming no forgiveness? 2011 +25 years would be 2036 correct?
I know you and everyone mentioned switching doesn’t restart your forgiveness clock. but the pay off date adds some confusion.
sorry last question.
Are you referring to the loan repayment estimator? If so, I’ve heard from multiple people who saw dates far into the future that didn’t account for previous payment activity. I wish studentaid would get that fixed, because it is really misleading and certainly adds confusion.
Hi Michael! Until now, I have been enrolled in the 10 year standard repayment plan, but for financial reasons I am thinking to switch over to SAVE. I have both undergrad and grad loans. Would my previous payments, prior to the COVID pause, count towards the 20-25 year timeframe before forgiveness kicks in under the SAVE plan?
Hi Lily! I think I have some great news for you. First, all of the prior payments should count toward the 25 year forgiveness due to the IDR Count Update scheduled to happen in early 2024. Second, the three-plus years that you were not required to make payments due to the pause will also count toward that 25 years.
Also, to clarify, you mentioned 20-25 years for forgiveness. Because you have some graduate debt, it would be a 25-year wait for all of your loans. The 20-year wait only applies to people who have 100% undergraduate debt.
That IS great news! And good to know about the difference with regard to undergrad and grad loan forgiveness as I wasn’t sure how that would work. Thanks so much for your help and for creating this website – it’s extremely helpful.
Just for clarification, under this adjustment, would the 25-year clock have started when I first began making payments on my *undergraduate* debt? Or does the timing of when I started paying back the *graduate* loans have any effect? I do realize that the grace periods/in-school deferments in between won’t be counted. Thanks!
Thats a tricky question. Each loan will have its own IDR count toward forgiveness. However, it is possible that you could consolidate your loans before the IDR Count Update happens. Be sure to check out the FAQ on this studentaid.gov article about consolidating loans with different counts.
How is social security benefits addressed? It’s not considered income especially if you’re a nonfiler.
Bingo! For a lot of seniors, Social Security income isn’t taxed, which means it isn’t included in their AGI. This often means those living on social security qualify for $0 per month payments.
This topic is covered in more detail in my article on repaying student loans for borrowers who live on Social Security.
If the SAVE Plan calculates my monthly payment should be $0, do those payments count toward Public Service Loan Forgiveness?
Correct! Of course, that assumes you meet the other requirements for PSLF.
If you are curious, here is some more information about $0 payments.
When I go to the application for the SAVE plan it’s showing me paying $150 MORE than I used to even though my income hasn’t changed much. And it’s still calculating 10% of my discretionary income even though I have zero graduate loans. I have an associates degree, not even close to a graduate degree. Super confused since I thought I’d be saving money with the new plan, not paying more…
Hi Dani,
I have a couple of thoughts. First, SAVE isn’t fully implemented until July 1, 2024. During phase 1, everyone will pay 10% of their discretionary income, but once phase 2 happens, yours will drop to 5%.
As for the discrepancy, it could be the number you are using for your income. IDR payments are made using your AGI from your tax return, if you are contributing to a retirement account, your AGI could be much lower than your gross income.
Interesting. I guess I missed the part where the percentage of discretionary income didn’t lower until next year. But I still can’t explain the $150 jump. I don’t think a roth ira should have any bearing on that, but I don’t know. Maybe they aren’t counting a dependant or something. Yet on this calculator, even with my correct dependants my payments are higher. Weird. Guess we’ll seee
Are you married? Does your spouse have student loans?
Marriage can have a huge impact on payment calculations.
If enrolling in Fresh Start with a defaulted loan, how does it get to an IDR plan such a REPAYE?
If you log on to the fresh start site, or call your servicer, you should be able to sign up for SAVE/REPAYE immediately. Fresh Start is designed to be super easy to do and help you get into an affordable IDR plan. You can read more about Fresh Start here.
We are 8 years into a 20 year repayment plan. Will changing the plan AND/OR enrolling in SAVE restart the terms of the repayment plan (IE: Negate the previous 8 years of payments)? How long is the SAVE commitment for?
Hi Rachelle,
The progress that you have earned toward forgiveness on another repayment plan, whether for PSLF or IDR forgiveness, does not reset. In fact, when they do the IDR count update, you may get credit for more than the 8 years you already have.
As for the commitment on SAVE, there isn’t really one. You can switch back to a balance-based plan if that suits your needs better. However, once SAVE is fully implemented July 1, 2024, some of the other IBR plans may not be available.
Do you advise waiting until the IDR count update is complete before making any changes to our repayment plan? Sounds like we can toggle between the plans to see which is best for us until the July 2024 implementation, is that correct? TY for your guidance.
I don’t really see a benefit to waiting. Because many of the best features on SAVE are available right away, waiting could be an expensive option. Changing repayment plans shouldn’t impact your IDR count update analysis.
How do you know if your IDR is in REPAY PLAN
There is a database of federal loans on studentaid.gov. If you click on your loans and then select an individual loan, you can see the repayment plan that it is signed up for.
When applying for REPAYE plan can I just include my income and not my spouses? We filed married joint in 2022, but will change to married separately for next year.
Thanks!
It’s my understanding that you do have the option of self-reporting your income when you certify. However, I think you are technically supposed to use your spouse’s income too because you filed jointly most recently.