SAVE Plan (Saving on a Valuable Education)

The SAVE Plan (Saving on a Valuable Education) is the newest federal income-driven repayment plan. It replaced the REPAYE plan in 2023 and, as designed, calculates your monthly payment as a percentage of your discretionary income using a more generous threshold than any other IDR plan.

How the math works

Under SAVE, discretionary income is your adjusted gross income minus 225% of the federal poverty line for your family size — versus the 150% threshold used by PAYE and IBR. That means more of your income is excluded from the calculation, which usually produces a lower monthly payment.

Your monthly payment under SAVE is:

• 5% of discretionary income if you only have undergraduate loans
• 10% of discretionary income if you have any graduate or professional loans
• A weighted average between 5% and 10% if you have both

Forgiveness timeline

SAVE forgives the remaining balance after 20 years of qualifying payments for borrowers whose loans were all for undergraduate study, and 25 years for borrowers with any graduate loans. Borrowers with original balances of $12,000 or less may qualify for forgiveness even sooner (after as few as 10 years).

Interest subsidy

SAVE includes a generous interest subsidy: if your monthly payment doesn't cover all the interest that accrues each month, the government waives the excess. That means your balance can't grow under SAVE the way it can under older IDR plans, even if your payment is $0.

Current legal status

Parts of the SAVE Plan have been challenged in federal court and certain provisions have been temporarily frozen. The payment calculation rules described here reflect the plan as originally designed; check the latest guidance at studentaid.gov or talk to a strategist before relying on a SAVE estimate.

Who SAVE tends to fit

Undergraduate-only borrowers with low to moderate incomes usually see the lowest payment under SAVE compared to PAYE or IBR. Borrowers chasing PSLF often use SAVE because the qualifying-payment count carries over, and the lower payments accelerate the forgiveness math.