What is effective interest rate and how do I calculate it for SAVE Plan?
![](/assets/images/user-pic.jpg)
Answered on October 02,2023
Your loan interest rate doesn't change. However, if some interest is waived, you may have a lower effective interest rate on your repayment plan.
For example, if your loan balance is $250,000, your interest rate is 7% and your monthly payment is $100, your effective interest rate (for that year) would be 100*12/250000=0.48%, which is lower than 7%. This is because all interest above your payment amount is waived or subsidized on the SAVE plan.
Guide
  Click here to get a detailed guide
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