Student Loan SAVE Plan Changes: Who Still Qualifies?

Understanding the Revised Student Loan SAVE Plan

Navigating student loan repayment can be daunting, especially with recent changes to the SAVE Plan. Whether you're a new borrower or have been repaying for years, it's crucial to understand how these updates impact your eligibility. Some details vary by state—watch for local notes as you go.

Start here: what to do first

The first step to understanding your eligibility under the new SAVE Plan is to assess your current repayment status and loan type. Gather your loan documents and log into your federal student aid account to review your loan details.

• Check if your loans are federal, as private loans are not eligible.
• Determine if your current repayment plan aligns with the new SAVE Plan.
• Consider your income level and family size, as these factors significantly impact eligibility.

Income-driven repayment changes: What you should know

Recent changes to the SAVE Plan have refined the income-driven repayment (IDR) options, potentially lowering monthly payments for many borrowers.

• The new plan calculates payments based on a lower percentage of discretionary income.
• If your income or family size changes, you might qualify for a recalculated, lower payment.
• The plan now includes provisions for unpaid interest to not accumulate if you make your monthly payments.
• Borrowers with undergraduate loans may see capped monthly payments, providing more predictable expenses.

Imagine you've been struggling to keep up with your payments due to a recent job loss. Under the new rules, you might qualify for a significantly reduced monthly payment, helping you stay on track without financial strain.

The impact of updated interest subsidies

One of the most significant changes to the SAVE Plan is the adjustment to interest subsidies, which can prevent your loan balance from growing even if your monthly payments are low.

• The plan offers full interest subsidies on subsidized loans if your monthly payment doesn't cover the interest.
• For unsubsidized loans, half of the unpaid interest is subsidized, which can save you money in the long term.
• This change is particularly beneficial for borrowers with lower incomes or those facing temporary financial difficulties.

Consider a scenario where your monthly payment is $0 due to low income—under the new plan, your outstanding interest won't increase your total loan balance, giving you peace of mind.

What to do if you're unsure about qualifying

If you're unsure about your eligibility or how these changes apply to you, here are some helpful steps:

• Contact your loan servicer for a detailed explanation of your options.
• Use the Federal Student Aid's loan simulator to explore different repayment scenarios.
• Keep updated with official announcements to ensure you don't miss any new changes or opportunities.

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FAQs

What types of loans are eligible for the SAVE Plan?

Only federal student loans, such as Direct Loans, are eligible. Private loans do not qualify.

How does my income affect my SAVE Plan eligibility?

Your monthly payment is determined by your discretionary income, which is your income minus a basic living allowance.

Can I switch to the SAVE Plan if I'm on a different repayment plan?

Yes, you can switch to the SAVE Plan, but you should contact your loan servicer to understand how this will impact your repayment schedule.

Will my loan balance grow if I can't make full payments?

Under the new SAVE Plan, unpaid interest won't cause your loan balance to increase if you make your required monthly payments.

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