SAVE Repayment Plan Calculator

Estimate your monthly student loan payments, discretionary income, and potential interest subsidy under the new SAVE plan.

Your SAVE Repayment Plan Estimate

What is the SAVE Repayment Plan?

The SAVE Repayment Plan, or Saving on a Valuable Education plan, is the newest income-driven repayment (IDR) plan for federal student loans. It replaces the Revised Pay As You Earn (REPAYE) plan and offers significant benefits designed to make student loan payments more affordable and prevent interest capitalization. This SAVE Repayment Plan Calculator helps you understand how your specific financial situation impacts your monthly payment.

Who Should Use the SAVE Repayment Plan?

The SAVE plan is generally beneficial for most federal student loan borrowers, especially those with lower incomes relative to their loan balances. It’s particularly advantageous for:

• Borrowers with low discretionary income: The plan calculates discretionary income more generously than previous IDR plans, leading to lower monthly payments.
• Borrowers with high interest rates: The interest subsidy feature prevents your loan balance from growing due to unpaid interest, even if your monthly payment is $0.
• Borrowers with undergraduate loans: The payment percentage for undergraduate loans is reduced from 10% to 5% of discretionary income starting July 2024.
• Borrowers seeking loan forgiveness: Like other IDR plans, SAVE offers loan forgiveness after 20 or 25 years of qualifying payments, depending on your loan type and original balance.

Common Misconceptions about the SAVE Repayment Plan

• It’s automatic: You must actively apply for the SAVE plan through your loan servicer or StudentAid.gov. It’s not automatically applied to your loans.
• It’s for all loans: The SAVE plan is only for federal student loans. Private student loans are not eligible.
• Payments always cover interest: While the SAVE plan offers an interest subsidy, your payment might still be less than the interest accrued. The key benefit is that the government covers the *unpaid* portion of the interest, preventing your balance from growing.
• It’s immediate forgiveness: Loan forgiveness under SAVE occurs after 20 or 25 years of qualifying payments, not immediately upon enrollment.

SAVE Repayment Plan Formula and Mathematical Explanation

Understanding the math behind the SAVE Repayment Plan Calculator is crucial for appreciating its benefits. The core idea is to base your monthly payment on your income, not just your loan balance.

Step-by-Step Derivation of the SAVE Payment

1. Determine Your Adjusted Gross Income (AGI): This is typically found on your federal tax return.
2. Calculate Your Effective Federal Poverty Guideline (FPG): The SAVE plan uses 225% of the FPG for your family size. The FPG varies by state and year. For this SAVE Repayment Plan Calculator, we use a general estimate:
   • Base FPG for a single person (e.g., $14,580 for 2023 mainland US).
   • Add a fixed amount for each additional family member (e.g., $5,140).
   • Effective FPG = Base FPG + (Family Size - 1) * Additional FPG
3. Calculate Your Discretionary Income: This is the amount of your income considered “discretionary” by the plan.
   • Discretionary Income = AGI - (2.25 * Effective FPG)
   • If this calculation results in a negative number, your discretionary income is considered $0.
4. Determine Your Annual Payment Amount: This depends on your loan types.
   • For undergraduate loans: 10% of discretionary income (reducing to 5% starting July 2024).
   • For graduate loans: 5% of discretionary income.
   • For mixed loans: A weighted average based on the proportion of your undergraduate vs. graduate loan balances. Our SAVE Repayment Plan Calculator uses the percentage of undergraduate loans you input.
     • Weighted Payment Percentage = (Undergrad Loan % * 0.10) + (Graduate Loan % * 0.05)
     • Annual Payment = Discretionary Income * Weighted Payment Percentage
5. Calculate Your Monthly Payment:
   • Monthly Payment = Annual Payment / 12
6. Calculate Monthly Accrued Interest:
   • Monthly Accrued Interest = (Loan Balance * (Interest Rate / 100)) / 12
7. Determine Interest Subsidy: This is a key benefit of the SAVE plan.
   • If Monthly Payment < Monthly Accrued Interest, then the government pays the difference.
     • Monthly Interest Subsidy = Monthly Accrued Interest - Monthly Payment
   • If Monthly Payment ≥ Monthly Accrued Interest, then there is no subsidy, as your payment covers all interest and some principal.

Variables Table

Key Variables for the SAVE Repayment Plan Calculator

Variable	Meaning	Unit	Typical Range
AGI	Adjusted Gross Income	USD ($)	$20,000 – $200,000+
Family Size	Number of individuals in your household	Persons	1 – 8+
Loan Balance	Total outstanding federal student loan debt	USD ($)	$5,000 – $200,000+
Interest Rate	Weighted average annual interest rate of your loans	Percent (%)	3% – 8%
Undergrad Loan %	Percentage of your total loan balance from undergraduate study	Percent (%)	0% – 100%
Effective FPG	Federal Poverty Guideline for your family size	USD ($)	$15,000 – $60,000+
Discretionary Income	Income above 225% of the FPG	USD ($)	$0 – AGI
Monthly Payment	Your calculated monthly payment under SAVE	USD ($)	$0 – $1,500+
Interest Subsidy	Amount of monthly interest the government pays	USD ($)	$0 – $500+

Practical Examples (Real-World Use Cases)

Let’s look at how the SAVE Repayment Plan Calculator works with different scenarios.

Example 1: Recent Graduate with Moderate Income and Undergraduate Loans

• AGI: $45,000
• Family Size: 1
• Loan Balance: $30,000
• Interest Rate: 6.0%
• Undergraduate Loan Percentage: 100%

Calculation Steps:

1. Effective FPG: Assuming a base FPG of $14,580 for a single person, 225% of FPG = $14,580 * 2.25 = $32,805.
2. Discretionary Income: $45,000 (AGI) – $32,805 (225% FPG) = $12,195.
3. Annual Payment: $12,195 * 0.10 (for undergrad loans) = $1,219.50.
4. Monthly Payment: $1,219.50 / 12 = $101.63.
5. Monthly Accrued Interest: ($30,000 * 0.06) / 12 = $150.00.
6. Interest Subsidy: $150.00 (Accrued Interest) – $101.63 (Payment) = $48.37.

Output: This borrower would pay $101.63 per month, and the government would cover $48.37 of their monthly interest, preventing their balance from growing.

Example 2: Established Professional with Higher Income and Graduate Loans

• AGI: $90,000
• Family Size: 2
• Loan Balance: $80,000
• Interest Rate: 7.0%
• Undergraduate Loan Percentage: 0% (all graduate loans)

Calculation Steps:

1. Effective FPG: Assuming base FPG $14,580 + $5,140 for 2 people = $19,720. 225% of FPG = $19,720 * 2.25 = $44,370.
2. Discretionary Income: $90,000 (AGI) – $44,370 (225% FPG) = $45,630.
3. Annual Payment: $45,630 * 0.05 (for graduate loans) = $2,281.50.
4. Monthly Payment: $2,281.50 / 12 = $190.13.
5. Monthly Accrued Interest: ($80,000 * 0.07) / 12 = $466.67.
6. Interest Subsidy: $466.67 (Accrued Interest) – $190.13 (Payment) = $276.54.

Output: This borrower would pay $190.13 per month, and the government would cover $276.54 of their monthly interest. Even with a higher income, the SAVE plan significantly reduces their out-of-pocket interest burden.

How to Use This SAVE Repayment Plan Calculator

Our SAVE Repayment Plan Calculator is designed for ease of use, providing quick and accurate estimates for your monthly student loan payments under the SAVE plan. Follow these simple steps:

Step-by-Step Instructions

1. Enter Your Annual Gross Income (AGI): Locate your AGI on your most recent federal tax return (Form 1040, line 11). This is a critical input for the SAVE Repayment Plan Calculator.
2. Input Your Family Size: This includes yourself, your spouse (if filing jointly), and any dependents you claim on your taxes.
3. Provide Your Total Federal Student Loan Balance: This is the sum of all your outstanding federal student loans. You can usually find this information on your loan servicer’s website.
4. Enter Your Weighted Average Interest Rate: If you have multiple loans with different rates, calculate a weighted average. For example, if you have $10,000 at 4% and $20,000 at 6%, your weighted average is ((10000*0.04) + (20000*0.06)) / 30000 = 5.33%.
5. Specify Your Undergraduate Loan Percentage: Indicate what percentage of your total loan balance originated from undergraduate studies. Enter 100% if all your loans are undergraduate, 0% if all are graduate, or a specific percentage for a mix.
6. Click “Calculate SAVE Payment”: The calculator will instantly display your estimated monthly payment and other key metrics.
7. Use the “Reset” Button: If you want to start over with new values, click the “Reset” button to clear all fields and restore default values.
8. “Copy Results” Button: Easily copy all calculated results to your clipboard for sharing or record-keeping.

How to Read the Results

• Estimated Monthly SAVE Payment: This is the primary result, showing your projected monthly payment amount.
• Calculated Discretionary Income: This value shows how much of your income is considered “discretionary” by the SAVE plan, which directly influences your payment.
• Effective Federal Poverty Guideline: This is the 225% FPG threshold used in your discretionary income calculation.
• Estimated Monthly Accrued Interest: The total interest that accumulates on your loans each month.
• Estimated Monthly Interest Subsidy: This is the amount of interest the government will pay on your behalf if your monthly payment doesn’t cover all the accrued interest. This prevents your loan balance from growing.
• Annual Interest Paid by Borrower/Government: These figures provide a yearly overview of who is responsible for paying the interest on your loans.
• Payment Schedule Table: Provides a month-by-month breakdown of how your payment is applied, showing interest accrued, subsidized, and principal paid.
• Monthly Payment vs. Accrued Interest Chart: A visual representation of your payment compared to the interest accumulating, clearly illustrating the impact of the interest subsidy.

Decision-Making Guidance

Use the results from this SAVE Repayment Plan Calculator to:

• Compare with other plans: See how the SAVE payment compares to standard repayment or other IDR plans.
• Budget effectively: Understand your new monthly obligation and plan your finances accordingly.
• Assess interest growth: The interest subsidy feature is a major benefit; see how much interest the government is covering for you.
• Plan for the future: While this calculator focuses on monthly payments, remember that the SAVE plan also offers loan forgiveness after a certain period.

Key Factors That Affect SAVE Repayment Plan Results

Several variables significantly influence your monthly payment and overall benefits under the SAVE Repayment Plan. Our SAVE Repayment Plan Calculator takes these into account:

• Adjusted Gross Income (AGI): Your AGI is the most critical factor. A lower AGI generally leads to a lower discretionary income and thus a lower monthly payment. Changes in your income (e.g., job loss, promotion) will directly impact your payment.
• Family Size: A larger family size increases the federal poverty guideline threshold, which in turn reduces your discretionary income and your monthly payment. This is why accurately reporting your family size is important for the SAVE Repayment Plan Calculator.
• Total Federal Student Loan Balance: While not directly used in the payment calculation (which is income-driven), a higher loan balance means more interest accrues each month. This makes the interest subsidy feature of the SAVE plan more valuable for borrowers with large balances, as it prevents rapid balance growth.
• Weighted Average Interest Rate: A higher interest rate means more interest accrues monthly. The SAVE plan’s interest subsidy is particularly beneficial here, as it covers any interest your payment doesn’t, regardless of how high the rate is.
• Loan Type (Undergraduate vs. Graduate): The payment percentage of discretionary income differs: 10% for undergraduate loans (reducing to 5% in July 2024) and 5% for graduate loans. This distinction can significantly alter your payment, especially for those with a mix of loan types. Our SAVE Repayment Plan Calculator allows you to specify this.
• Federal Poverty Guidelines (FPG): The FPGs are updated annually and vary by state and family size. The SAVE plan uses 225% of the FPG to determine your discretionary income threshold. Fluctuations in these guidelines can subtly affect your payment.
• Filing Status (Married Borrowers): If you’re married and file taxes jointly, both your and your spouse’s income are included in the AGI. If you file separately, only your income is counted, which can lead to a lower payment if your spouse has significant income. However, filing separately might have other tax implications.

Frequently Asked Questions (FAQ) about the SAVE Repayment Plan Calculator

Q: What types of loans are eligible for the SAVE plan?

A: The SAVE plan is for federal student loans, including Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans (for graduate/professional students), and Direct Consolidation Loans (that did not include Parent PLUS loans). FFEL Program loans can become eligible if consolidated into a Direct Consolidation Loan.

Q: How often do I need to recertify my income for the SAVE plan?

A: You must recertify your income and family size annually. Your loan servicer will notify you when it’s time to recertify. Failing to do so can lead to your payments reverting to a higher amount and potential interest capitalization.

Q: Can my monthly payment be $0 under the SAVE plan?

A: Yes, if your discretionary income is $0 or negative, your monthly payment will be $0. Even with a $0 payment, the interest subsidy feature ensures your loan balance won’t grow due to unpaid interest.

Q: What is the interest subsidy, and how does it work?

A: The interest subsidy is a key benefit of the SAVE plan. If your calculated monthly payment is less than the interest that accrues on your loans each month, the government covers the difference. This prevents your loan balance from increasing due to unpaid interest, a common issue with other income-driven repayment plans.

Q: Does the SAVE plan offer loan forgiveness?

A: Yes, like other IDR plans, the SAVE plan offers loan forgiveness after a certain number of qualifying payments. Forgiveness can occur after 20 years of payments for borrowers with only undergraduate loans, or 25 years for those with any graduate school loans. Some borrowers with original loan balances of $12,000 or less may qualify for forgiveness in as little as 10 years.

Q: How does the SAVE plan compare to other IDR plans like PAYE or IBR?

A: The SAVE plan generally offers the lowest monthly payments by calculating discretionary income more generously (225% of FPG vs. 150% for other plans). It also has the unique 100% interest subsidy. For most borrowers, SAVE will result in lower payments and better long-term outcomes than other IDR plans.

Q: What if my income changes significantly during the year?

A: You can request to have your payment recalculated at any time if your income or family size changes significantly. This can be beneficial if your income decreases, potentially lowering your monthly payment. Use the SAVE Repayment Plan Calculator to see the impact of such changes.

Q: Is the SAVE plan beneficial if I plan to pursue Public Service Loan Forgiveness (PSLF)?

A: Yes, payments made under the SAVE plan count towards PSLF. Since SAVE often results in lower monthly payments, it can be an excellent option for borrowers pursuing PSLF, allowing them to maximize their forgiveness amount while making affordable payments.

Related Tools and Internal Resources

Explore more resources to help manage your student loans and financial future:

• Student Loan Guide: Understanding Your Options – A comprehensive guide to navigating federal and private student loans.
• Income-Driven Repayment (IDR) Calculator – Compare payments across all IDR plans, including SAVE, PAYE, IBR, and ICR.
• Understanding Federal Student Loans – Learn about the different types of federal loans and their features.
• Student Loan Forgiveness Options – Explore various paths to student loan forgiveness, including PSLF.
• Loan Interest Calculator – Calculate interest on any loan to understand accrual.
• Managing Student Loan Debt – Strategies and tips for effectively handling your student loan obligations.