How to calculate SAVE Plan payment for Student Loan?
Answered on September 27,2023
For anyone having trouble calculating their estimated SAVE plan payment.
Monthly SAVE plan payment equals:
(AGI - (2.25*PL)) X (0.1/12)
If you are unsure how to use this equation see end of post for more clarity
AGI = adjusted gross income off your 2022 tax return
PL = the federal poverty level for your household size
Poverty line for 2023:
$14,580 for 1 person
$19,720 for 2 person
$24,860 for 3 person
$30,000 for 4 person
$35,140 for 5 person
Everyone is at 10% regardless of undergrad or grad loans. The lower 5% for undergrad loans does not start until middle of 2024
If you get a negative number, it means your AGI is less than 2.25 times the poverty level. And your payment is zero.
For more clarity:
Step 1- multiply 2.25 times your poverty level number
Step 2- Subtract the answer from step 1 from your AGI
Step 3- multiply by 0.1
Step 4- divide by 12
If both spouses have federal student loans and file taxes jointly then the payment is prorated:
Spouse 1 payment= (Spouse 1 Loans / Total Loans) X (SAVE payment calculated above)
Spouse 2 payment= (Spouse 2 Loans / Total Loans) X (SAVE payment calculated above)
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Here are the 225% poverty line offsets [i.e. PL x 2.25] for residents of the lower 48 states.
1-Person [PL = $14,580]: $32,805
2-Person [PL = $19,720]: $44,370
3-Person [PL = $24,860]: $55,935
4-Person [PL = $30,000]: $67,500
5-Person [PL = $35,140]: $79,065
For each additional person, the 2023 poverty line increases $5,140. The offset amount increases by $11,565.
In Alaska, the rates are slightly higher but the poverty line math remains the same.
In AK, the 1-person poverty line level is $16,090 and increases $5680 per person. The 1-person, 225% offset is $36,202 and increases $12,780 for each additional person.
In HI, the 1-person poverty line level is $16,770 and increases $5910 per person. The 1-person, 225% offset is $37,732 and increases $13,297 for each additional person
Ultimate Guide on SAVE Plan - Payment Calculation, Interest, Forgiveness
Under the Saving on a Valuable Education (SAVE) plan, a single borrower who makes less than $15 an hour will not have to make any payments. Borrowers earning above that amount would save mor..  Click here to get a detailed guide