SAVE Repayment Plan Offers Lower Monthly Loan Payments
"Saving on a Valuable Education" loan repayment plan will offer a lot of support for the lowest income federal borrowers, but it's likely not the cheapest option for most MBA borrowers.
SAVE replaces the plan formerly known as Revised Pay as You Earn. And the other IDR plans — Pay as You Earn and income-contingent repayment — will be eliminated.
The primary difference in benefits is for graduate borrowers who have to wait 25 years for loan forgiveness on SAVE versus 20 years on PAYE.
Pros:
1. Affordable monthly payments: 10% of your monthly discretionary income this year, then 5% from summer 2025. MDI = 225% x poverty rate for household size.
2. Cap on interest: That means if your monthly payment is $0, you won’t be charged additional interest. If $50 in interest accumulates on your loans in a month, but your payment is only $30, you won’t be charged the additional $20.
3. Forgiveness after as little as 10 years: Beginning in 2024, those with principal loan balances of $12,000 or less can have remaining balances forgiven after just 10 years of payments on the SAVE plan. You’ll need to make payments for an additional year for every $1,000 you borrowed above $12,000 up to 20 or 25 years, depending on the degree.
Cons:
1. Borrowers with mid-level balances don’t stand to benefit as much.
2. Monthly payment adjusts as income changes: There is no cap on how much you can repay, so this is essentially loan repayment that is tied to your income level.
Federal Student Aid's Website with SAVE information