The Saving on a Valuable Education (SAVE) plan is a newly introduced income-driven repayment plan for federal student loan borrowers. Currently, monthly payments under the SAVE plan are calculated as 10% of borrowers’ discretionary income, which is the difference between their adjusted gross income and 225% of the federal poverty line. However, starting in July, the payments will be reduced to 5% of discretionary income for borrowers with undergraduate debt on the SAVE Plan. This change is expected to make loan payments more affordable for borrowers, especially for those with lower incomes.
The amount that borrowers could potentially save under the new repayment plan is significant. For example, a single undergraduate borrower earning $60,000 a year would see their monthly loan payment drop from $227 to about $109 in July. Additionally, if interest has accrued on the loans in excess of the monthly payment, the government will cover the rest. Borrowers with both undergraduate and graduate school loans will have a weighted average between 5% and 10% of their discretionary income based on the original loan balances, while those with only graduate school loans will still have to pay 10% of their discretionary income. Remaining balances can be forgiven in as little as 10 years of repayments for those who stay on the SAVE plan.
All federal student loan borrowers with direct loans are eligible to apply for the SAVE plan through their loan servicer. It is also recommended to use Federal Student Aid’s loan simulator tool to determine if this repayment plan is the right choice for individual financial situations. The reduction in monthly payments is crucial for borrowers who have faced challenges in keeping up with payments since they resumed in October. With more than one-third of borrowers expressing difficulty in making loan payments, the reduction to 5% of discretionary income under the SAVE plan could provide much-needed relief.
According to surveys, financial strain has been a major obstacle for borrowers in resuming or starting loan payments. Many borrowers were found to be unaware of available repayment options and the potential for smaller monthly payments through income-driven plans like SAVE. By increasing awareness of these options, more borrowers could potentially benefit from lower monthly payments and ultimately better manage their student debt. It is important for borrowers to explore different repayment plans and resources available to make informed decisions about their student loans and financial well-being.
In order to become a successful and confident communicator, it is essential to master public speaking skills. CNBC offers an online course on becoming an effective communicator, covering aspects such as speaking clearly and confidently, managing nerves, body language techniques, and making a great first impression. By developing these skills, individuals can improve their communication abilities and enhance their professional and personal success. Signing up for newsletters and resources from CNBC Make It can also provide valuable tips and tricks for success in work, finances, and life. By staying informed and proactive, individuals can navigate challenges like student loan repayment more effectively and achieve their financial goals with confidence.
