SAVE Plan Student Loans Calculator – The Ultimate Guide

Are you struggling to find the right repayment plan for your federal student loans? Look no further! The SAVE Plan (Saving on a Valuable Education) is a new federal student loan repayment program introduced by the Biden administration that aims to lower monthly payments for millions of borrowers. In this comprehensive guide, we will walk you through the ins and outs of the SAVE Plan and show you how to use the SAVE Plan student loans calculator to determine your monthly payment. So, let’s dive in!

Understanding the SAVE Plan

The SAVE Plan calculates monthly payments based on your income and family size, making it particularly beneficial for low-income borrowers. Unlike other income-driven repayment plans, the SAVE Plan does not take into consideration the total amount of student loan debt you owe. This means that even if you have a significant loan balance, your monthly payment will be based solely on your income and family size.

One of the key advantages of the SAVE Plan is that unpaid interest will not accrue if you make a full monthly payment. This means that your loan balance won’t increase even if your monthly payment doesn’t cover the interest accumulated that month. Additionally, there is a forgiveness component to the SAVE Plan. After making at least 10 years of payments, some borrowers may have their remaining balance wiped away.

Eligibility and Enrollment

Most borrowers with federal student loans will qualify for the SAVE Plan. To enroll in the program, you need to submit an application for income-driven repayment plans on the Federal Student Aid website. It’s important to note that the SAVE Plan is being phased in gradually. While this year, borrowers’ payments will equal 10% of their discretionary income, next year, payments for loans borrowed for undergraduate school will be further reduced to 5% of discretionary income. If you have loans from both undergraduate and graduate school, your payment will be a weighted average between 5% and 10% of your income based on the original principal balances of your loans.

Using the SAVE Plan Student Loans Calculator

Now that you have a good understanding of the SAVE Plan, let’s explore how to use the SAVE Plan student loans calculator to determine your monthly payment. The calculator takes into account your income, family size, and other relevant factors to provide an estimate of your monthly payment under the SAVE Plan.

To use the calculator, follow these simple steps:

1. Gather your financial information: Before using the calculator, make sure you have your adjusted gross income (AGI) and family size. Your AGI can be found on line 11 of your IRS 1040 form on tax returns filed in 2021 or 2022.
2. Access the calculator: Visit the Federal Student Aid website and navigate to the SAVE Plan student loans calculator. You may need to create an account or log in to access the calculator.
3. Enter your information: Input your AGI and family size into the calculator. The calculator will then generate an estimate of your monthly payment under the SAVE Plan based on the information provided.
4. Analyze the results: Review the calculated monthly payment and consider whether it aligns with your budget and financial goals. If necessary, you can adjust your income or family size to see how it affects your payment amount.

Evaluating the Results

After using the SAVE Plan student loans calculator, it’s essential to evaluate the results and determine if the SAVE Plan is the best option for you. While the SAVE Plan offers lower monthly payments, it’s important to consider the long-term implications.

One factor to consider is the extended repayment period that comes with lower monthly payments. By reducing your monthly payment, you may end up paying more over time with interest. This could result in a longer repayment term, potentially delaying your path to becoming debt-free.

Additionally, if you have a significant loan balance or anticipate significant income growth in the future, it may be worth exploring other repayment options or refinancing. These alternatives could potentially save you more money in the long run.

Other Federal Student Loan Repayment Options

While the SAVE Plan is a promising option for many borrowers, it’s worth exploring other federal student loan repayment plans to ensure you make an informed decision. Here are some alternative income-driven repayment plans you may consider:

1. Revised Pay As You Earn (REPAYE): Similar to the SAVE Plan, REPAYE ties monthly payments to your income and family size. It offers forgiveness after 20 or 25 years of payments, depending on your loan type.
2. Pay As You Earn (PAYE): PAYE is another income-driven repayment plan that caps monthly payments at 10% of your discretionary income. It offers forgiveness after 20 years of payments.
3. Income-Based Repayment (IBR): IBR is an income-driven repayment plan that calculates monthly payments based on your income and family size. It offers forgiveness after 20 or 25 years of payments, depending on when you took out your loans.
4. Standard 10-Year Repayment: If you prefer a fixed repayment plan, the standard 10-year repayment option may be suitable for you. This plan requires fixed monthly payments over a 10-year period.

Considering Student Loan Refinancing

In addition to federal student loan repayment plans, you may also consider student loan refinancing as an alternative option. Refinancing involves taking out a new loan with a private lender to pay off your existing federal loans. By refinancing, you may be able to secure a lower interest rate and potentially save money over the life of your loan.

However, it’s important to note that refinancing federal loans means losing out on federal borrower protections, such as income-driven repayment plans and loan forgiveness options. Before refinancing, carefully evaluate the potential benefits and drawbacks to ensure it aligns with your financial goals.

Conclusion

The SAVE Plan offers a promising solution for borrowers seeking lower monthly payments for their federal student loans. By utilizing the SAVE Plan student loans calculator and evaluating the results, you can gain a clearer understanding of your repayment options. Remember to consider the long-term implications and explore other federal repayment plans or refinancing options to make an informed decision. With careful consideration and planning, you can find the repayment strategy that best suits your financial situation and helps you achieve your goal of becoming debt-free.