Is the Biden Administration’s SAVE Plan Right for YOU? – Learn More Now | Ep. 258

• Tiffany introduces the SAVE plan as a new income-driven repayment option for federal student loans that calculates payments based on income and family size rather than original loan amount.

It calculates loan payments based on the borrower's income and family size, not your original loan amount.

• The plan uses 225% of the federal poverty level based on family size and state of residence to determine discretionary income, then sets payments at 10% of that amount.

They're looking at what number is like poverty level, adding 225% to that. And then they're saying, okay, this is how much expenses you should have. And then anything over that is your discretionary income.

• The plan promises to cut undergraduate payments in half compared to other IDR plans and ensure balances never grow, though some borrowers may face higher payments or other unintended consequences.

A typical borrower could save around $1,000 a year.

• Outstanding balances are forgiven after 20 years (undergraduate) or 25 years (graduate/professional study). Borrowers may face income tax liability on forgiven amounts.

You may have to pay income tax on any amount that is forgiven.

• The plan works well for those pursuing PSLF, as lower payments help during the 10-year qualifying period. Married borrowers can strategically file separately to exclude spousal income.

This is good for people that are going towards the public service loan forgiveness.

• Borrowers should check their loan servicer website to confirm direct federal loan eligibility and explore which repayment plans they're eligible for before payments restart in October.