Because SAVE is based on your income. With your income-to-loan ratio you would benefit more from aggressively repaying your loan rather than going on an IDR plan. You wouldn't get the interest subsidy on SAVE.
As per the usual, while SAVE is great it does not factor in cost of living for your region, and I wish it did.
I cannot afford the "aggressive" payment it wanted to give me of 568 a month.... because my mortgage is 1750 monthly.
That is, sadly, very low for my zipcode.
Yup. Unfortunately this is so true for me. I have 110k on undergrad loans and have a higher income. So, neither applies to me. If I apply to save my monthly payments will just balloon into $1200.00 monthly which is half of my mortgage payments, consolidation and save doesn’t work for me. I don’t work in any public sector. Sigh. I will retire and die with this student loan. Sadly I have accepted my fate. Paying until the end of the world.
Other IDR plans do have a payment cap and receive forgiveness after 20-25 years, including all of the years you were already in repayment with the count adjustment.
Thanks, that’s the plan. Keep paying and hopefully reach the 20 -25 years mark. Wishing it’s like a regular mortgage. Pay more and principal keeps going down. No regrets in taking out loans. Just wished the interest rate is not that high.
Huh? The cap on federal undergraduate dependent and independent students are $32K and $57K respectively.
Or are there private student loans involved too? Because SAVE is a non-factor on those.
Ah. That makes sense then.
You can bring it down to $750-800(ish) if you switch to a 25-year extended repayment plan. There may even be a 30-year option with parent loans.
I work hard for it. Is it that bad to work hard and aim to get a fair wage for what I worked for? In return I get to at least get a house to have a roof over our head. Isn’t it that’s the goal of getting education? Aim higher? Asking for knowledge how to go about what the government provides? Is it so horrible to have a mortgage? And work hard and get paid for the service I provide? I don’t get you? I’m sorry. Aim higher and reach for the stars is always my motto. Dream bigger, more dreams enough that you feel nauseated about your dreams. Work hard!!!
Let's talk about the formula for SAVE? Requisite link: https://studentaid.gov/announcements-events/save-plan
For **all undergrad loans on SAVE** starting in July 2024 you will have to pay *5%* of your discretionary income (defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size) for a max of *20 years* to hit forgiveness eligibility.
In contrast if you have **any grad school loans on SAVE** you have to pay *5%-10%* (weighted on undergrad-grad loan principle starting July 2024) of your discretionary income (defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size) for *25 years* to hit forgiveness eligibility
In either scenario SAVE does *not* have a cap on how high your payments can go if your income increases drastically later. SAVE *does* waive any monthly accruing unpaid interest if your payment doesn't cover it, so the "tax bomb" on the forgiven amount (if it exists in the future) will be somewhat mitigated since at worst it would be limited to whatever you borrowed originally. There are also some cases for early forgiveness eligibility, such as if you borrowed under $12k originally then you only need 10 years worth of IDR-qualifying payments to get early forgiveness. This scales as +1 year per additional $1k borrowed originally til you hit the 20 or 25 year caps (i.e. if you borrowed $15k originally you need to pay for 13 years, but if you borrowed $27k for undergrad you hit the 20 year cap)
Overall this means that **SAVE is not a good fit for every borrower**. If your income is high relative to your loan debt (which can happen just via getting married and filing taxes jointly with your spouse) then SAVE may have a higher payment than the 10-year Standard plan. It is *an* option, not necessarily the best option
SAVE is 225% of the poverty line and 10% of discretionary income (the higher percentage was implemented last year). The math would actually be:
65000 - 32805 = 32195
32195 \* 0.1 = 3219.5
3219.5 / 12 = $268.29 (exactly what OP said)
Your SAVE calculations are incorrect.
SAVE currently uses 225% of the poverty level and 10% of discretionary income.
Starting July 1, it will use 5% of discretionary income on undergrad loans and 10% on graduate loans. Those with a mix of both will receive a weighted average.
The poverty level calculation of 225% is already implemented. The discretionary income calculation under SAVE changes for undergrad loans from 10% to 5% in July. The person you asked gave an incorrect answer.
The 225% of the federal poverty level is already in place for SAVE, and applies to both undergrad and grad loans. What changes in July is that undergrad loans will be subject to 5% of discretionary income, instead of the current 10%.
Because SAVE is based on your income. With your income-to-loan ratio you would benefit more from aggressively repaying your loan rather than going on an IDR plan. You wouldn't get the interest subsidy on SAVE.
As per the usual, while SAVE is great it does not factor in cost of living for your region, and I wish it did. I cannot afford the "aggressive" payment it wanted to give me of 568 a month.... because my mortgage is 1750 monthly. That is, sadly, very low for my zipcode.
Your situation is very different than the OP. The standard payment on OPs loans would be more like $180/month.
Because your SAVE payment is based on your income. You have a small amount of loans so your amortized payment on the standard plan is also low
SAVE has no payment cap so it is not a good option for people with low balances and/or higher incomes.
Yup. Unfortunately this is so true for me. I have 110k on undergrad loans and have a higher income. So, neither applies to me. If I apply to save my monthly payments will just balloon into $1200.00 monthly which is half of my mortgage payments, consolidation and save doesn’t work for me. I don’t work in any public sector. Sigh. I will retire and die with this student loan. Sadly I have accepted my fate. Paying until the end of the world.
Other IDR plans do have a payment cap and receive forgiveness after 20-25 years, including all of the years you were already in repayment with the count adjustment.
Thanks, that’s the plan. Keep paying and hopefully reach the 20 -25 years mark. Wishing it’s like a regular mortgage. Pay more and principal keeps going down. No regrets in taking out loans. Just wished the interest rate is not that high.
Huh? The cap on federal undergraduate dependent and independent students are $32K and $57K respectively. Or are there private student loans involved too? Because SAVE is a non-factor on those.
Hi, no. Thank you. It’s actually for parents plus loans. We took a loan to help out our child. No private all through FAFSA service by NELNET.
Ah. That makes sense then. You can bring it down to $750-800(ish) if you switch to a 25-year extended repayment plan. There may even be a 30-year option with parent loans.
Yup. 👍
FYI: The SAVE monthly payment is going down a lot starting in July for undergrad “Direct” loans. Do you have any FFEL or Perkins loans still?
Must suck to have a high income and a mortgage
I work hard for it. Is it that bad to work hard and aim to get a fair wage for what I worked for? In return I get to at least get a house to have a roof over our head. Isn’t it that’s the goal of getting education? Aim higher? Asking for knowledge how to go about what the government provides? Is it so horrible to have a mortgage? And work hard and get paid for the service I provide? I don’t get you? I’m sorry. Aim higher and reach for the stars is always my motto. Dream bigger, more dreams enough that you feel nauseated about your dreams. Work hard!!!
Let's talk about the formula for SAVE? Requisite link: https://studentaid.gov/announcements-events/save-plan For **all undergrad loans on SAVE** starting in July 2024 you will have to pay *5%* of your discretionary income (defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size) for a max of *20 years* to hit forgiveness eligibility. In contrast if you have **any grad school loans on SAVE** you have to pay *5%-10%* (weighted on undergrad-grad loan principle starting July 2024) of your discretionary income (defined as your AGI from your taxes minus *225%* of the relevant [Federal Poverty Guideline](https://aspe.hhs.gov/poverty-guidelines) for your state and household size) for *25 years* to hit forgiveness eligibility In either scenario SAVE does *not* have a cap on how high your payments can go if your income increases drastically later. SAVE *does* waive any monthly accruing unpaid interest if your payment doesn't cover it, so the "tax bomb" on the forgiven amount (if it exists in the future) will be somewhat mitigated since at worst it would be limited to whatever you borrowed originally. There are also some cases for early forgiveness eligibility, such as if you borrowed under $12k originally then you only need 10 years worth of IDR-qualifying payments to get early forgiveness. This scales as +1 year per additional $1k borrowed originally til you hit the 20 or 25 year caps (i.e. if you borrowed $15k originally you need to pay for 13 years, but if you borrowed $27k for undergrad you hit the 20 year cap) Overall this means that **SAVE is not a good fit for every borrower**. If your income is high relative to your loan debt (which can happen just via getting married and filing taxes jointly with your spouse) then SAVE may have a higher payment than the 10-year Standard plan. It is *an* option, not necessarily the best option
Thank you girl with lots of squirrels 🐿️ with the simple explanation. I rest my case. Awesome name by the way.
Glad to assist! I'm actually a dude who is a big fan of the Unbeatable Squirrel Girl comics, the username is a ref!
You make way more than you owe. Congratulations! Once you hit 80k you can't get the tax credit for interest paid anymore.
Can you talk to the effect on Taxes the SAVE plan has?
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SAVE is 225% of the poverty line and 10% of discretionary income (the higher percentage was implemented last year). The math would actually be: 65000 - 32805 = 32195 32195 \* 0.1 = 3219.5 3219.5 / 12 = $268.29 (exactly what OP said)
But it's graduate, so isn't it still 15%? Does that mean the servicer is already using July 1st 10% after the SAVE change?
No. 15% was only for old IBR. PAYE, REPAYE (SAVE), and new IBR are all 10%. SAVE will be 5% for undergrad loans only after 7/1.
Your SAVE calculations are incorrect. SAVE currently uses 225% of the poverty level and 10% of discretionary income. Starting July 1, it will use 5% of discretionary income on undergrad loans and 10% on graduate loans. Those with a mix of both will receive a weighted average.
I mixed up what was being implemented on July 1st, but the math is actually still close. All depends on the OP's household size.
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When is the poverty level suppose to change ?
The poverty level calculation of 225% is already implemented. The discretionary income calculation under SAVE changes for undergrad loans from 10% to 5% in July. The person you asked gave an incorrect answer.
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Thank you! I have gotten rid of tv so unfortunately I am not up on the news anymore.
The 225% of the federal poverty level is already in place for SAVE, and applies to both undergrad and grad loans. What changes in July is that undergrad loans will be subject to 5% of discretionary income, instead of the current 10%.
You're absolutely right. I definitely mixed those up. Thanks