Why my repayment under SAVE plan is high?
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Abbey Johnson, Helping with Student Loan DocumentationAnswered on September 28,2023
SAVE is best for folks whose income is low relative to their loan debt. If you're making $100k and have $20k in student loans then SAVE isn't a great fit, but if you had $200k in student loans then it's a different story.
SAVE calculates your required payment as a percentage of "discretionary income", which is defined as your AGI from your taxes minus 225% of the relevant Federal Poverty Guideline for your state and household size.
For a family of 5 in 2023 that poverty guideline value is $35,140, so if you apply with your joint income you'd still have a $0/month payment
SAVE also waives any monthly unpaid interest after you make a "payment" as per SAVE plan so she should sign up and enjoy the fact that a $0/month payment will process automatically each month for the next year and enjoy the fact that her balance won't grow. She will have to recertify her income each year to stay on SAVE, and if your joint income increases then the billed amount may change, but for your current situation SAVE seems like an excellent fit
Those that benefit the most from SAVE are those whose payment is lower than the accuring interest.
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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
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