Save Plan Calculator

Complete Guide: SAVE Plan Calculator

The SAVE Plan Calculator helps you estimate monthly payments under the Saving on a Valuable Education (SAVE) income-driven repayment plan for federal student loans. Understanding your payment amount is crucial for budgeting and planning your financial future, especially with the unique benefits SAVE offers compared to other IDR plans.

What is the SAVE Plan?

The SAVE plan is a new income-driven repayment (IDR) plan introduced by the Biden administration as a replacement for the previous REPAYE plan. The plan calculates your monthly payment based on discretionary income, not total income, which can significantly reduce monthly payments for many borrowers. Key features include:

• Reduced payment percentages: Only 5% of discretionary income for undergraduate loans (vs. 10% under REPAYE)
• Higher income exemption: Payments are based on income above 225% of the federal poverty line (vs. 150%)
• Automated interest subsidies: Any unpaid interest is automatically covered, preventing loan balance growth
• Faster forgiveness for smaller loans: Forgiveness after 10 years for balances under $12,000

How SAVE Plan Payments Are Calculated

Your monthly payment under SAVE is based on a specific formula:

Monthly Payment = (Annual Income - (Poverty Line × 2.25)) × Payment % ÷ 12

Key Components:

• Annual Income: Your adjusted gross income (AGI) from your most recent tax return
• Poverty Line: Based on your family size and state (225% is excluded from calculations)
• Payment Percentage: 5% for undergraduate loans, 10% for graduate loans, 7.5% for mixed
• Discretionary Income: The amount above 225% of the poverty guideline

Understanding Your Results

Our calculator shows you:

• Monthly Payment: Your estimated payment under SAVE
• Discretionary Income: The income subject to payment calculation
• Poverty Line: The baseline income for your household
• Forgiveness Timeline: When your remaining balance will be forgiven (10-25 years)
• Interest Subsidy: Estimated interest the government will cover on your behalf

The interactive chart shows how your loan balance changes over time. If your payment doesn't cover all interest, SAVE automatically covers the difference, preventing negative amortization.

Important Factors Affecting SAVE Payments

Family Size

Your family size directly impacts your poverty line calculation. More family members means a higher poverty threshold, which increases the income that's protected from payment calculations. Include yourself, your spouse, and any children or other dependents you financially support.

Example: A single person has a $15,190 poverty line, while a family of four is $31,630. This means a family of four can earn $71,167 before any payment is required (vs. $34,177 for a single person).

State of Residence

Poverty guidelines are higher in Alaska and Hawaii due to higher costs of living. Our calculator accounts for these state-specific adjustments.

Marital Status and Filing Status

If you're married and file taxes jointly, both incomes are included in the calculation. Filing separately may lower your payment but has other tax implications. Our calculator includes this factor when you select "Married Filing Jointly."

Loan Type

The SAVE plan uses different payment percentages:

• 5% of discretionary income for undergraduate loans only
• 10% of discretionary income for graduate loans only
• Approximately 7.5% for a mix of undergraduate and graduate loans

SAVE vs. Other IDR Plans

Understanding how SAVE compares to other plans helps ensure you choose the best option:

• SAVE vs. PAYE: SAVE has a lower payment percentage for undergrad loans (5% vs. 10%) and higher income exemption (225% vs. 150% of poverty line)
• SAVE vs. IBR: SAVE payments are typically much lower and include better interest subsidies
• SAVE vs. REPAYE: SAVE has lower payment percentages and better interest subsidies
• SAVE vs. Standard Repayment: SAVE payments are based on income, not loan balance, often resulting in lower monthly costs

Common Mistakes to Avoid

Not Recertifying Income Annually

You must recertify your income and family size every year. Missing the deadline can result in higher payments or even capitalization of unpaid interest. Set calendar reminders to submit income documentation on time.

Ignoring Tax Filing Implications

Your tax filing status affects payment calculations. While filing separately might reduce your loan payment, it could increase your overall tax bill. Consider consulting with a tax professional, especially if you have a high loan balance.

Forgoing Lower Payments Early

Even if you can afford higher payments, starting with the minimum SAVE payment allows you to benefit from interest subsidies and potential forgiveness later. The savings from avoiding interest capitalization often outweigh paying extra early.

Not Understanding State Variations

If you move between states with different poverty guidelines, your payment could change. Even states like Alaska and Hawaii have higher poverty thresholds than the contiguous states.

Real-World Example: Sarah's SAVE Plan Journey

Let's follow Sarah, a recent graduate with $35,000 in undergraduate loans at 5.5% interest, earning $42,000 annually in Ohio:

- Poverty line (single, contiguous): $15,190

- Excluded income: $15,190 × 2.25 = $34,177

- Discretionary income: $42,000 - $34,177 = $7,823

- Annual payment: $7,823 × 5% = $391

- Monthly payment: $391 ÷ 12 = $32.62

Sarah's monthly payment is just $33! If her income increases to $55,000, her payment becomes $80/month. After 25 years of payments (or 20 if only undergraduate loans), any remaining balance is forgiven.

Planning Strategies

Use the SAVE Plan Calculator to:

• Plan career changes: See how different income levels affect your payment
• Family planning: Understand how having children impacts your payment
• Retirement planning: Factor student loan payments into your long-term financial goals
• Tax planning: Model different filing status scenarios
• Forgiveness timing: Know when your loans will be forgiven under SAVE

When to Consider Other Options

While SAVE is advantageous for most borrowers, consider alternatives if:

• You have a very high income relative to your loan balance (Standard Repayment might be faster)
• You work in Public Service (PSLF with SAVE payments may be optimal)
• You're approaching loan forgiveness under another IDR plan (switching resets the clock)
• You have Parent PLUS loans (SAVE eligibility is limited)

Current Legal Status

The SAVE plan is currently facing legal challenges, which could affect enrollment and benefits. Always check the latest status at StudentAid.gov before making decisions based on SAVE benefits. Current enrollees may see their benefits adjusted based on court decisions.

Key Takeaways

The SAVE plan offers significant advantages for most federal student loan borrowers:

• Lower monthly payments based on discretionary income above 225% of poverty line
• No interest capitalization thanks to automatic subsidies
• Faster forgiveness for smaller balances (10 years for loans under $12,000)
• Payment percentages as low as 5% for undergraduate loans
• Generous family size calculations increase protected income

Use this calculator to understand your specific situation and make informed decisions about your student loan repayment strategy.