Student Loan Save Plan Calculator
Your Estimated Monthly Payment
$0.00
Total Paid Over Loan Term
$0.00
Total Interest Paid
$0.00
Understanding Student Loan Repayment Plans and the SAVE Plan
Navigating student loan repayment can be complex, but understanding your options can lead to significant savings and reduced financial stress. Federal student loans offer various repayment plans, and the Saving on a Valuable Education (SAVE) Plan is one of the most beneficial for many borrowers. This calculator helps you estimate your potential monthly payments under the SAVE Plan.
What is the SAVE Plan?
The SAVE Plan (formerly REPAYE) is an income-driven repayment (IDR) plan designed to make monthly payments more affordable based on your income and family size. Key features include:
- Lower Monthly Payments: Your payment is calculated as a percentage of your discretionary income, which is the difference between your adjusted gross income (AGI) and 225% of the poverty guideline for your family size.
- Interest Subsidy: If your calculated payment doesn't cover the interest that accrues each month, the government covers the remaining interest. This means your loan balance won't grow due to unpaid interest.
- Shorter Repayment for Smaller Balances: Borrowers with original principal balances of $12,000 or less may have their remaining loans forgiven after as little as 10 years of payments, with an additional year for every $1,000 above $12,000 (up to 20 or 25 years).
- No Zero Payments: Even if your income is very low, you will not be required to pay more than $0 per month.
How the SAVE Plan Payment is Calculated (Simplified):
The core of the SAVE Plan calculation involves determining your discretionary income and then applying a percentage to it. For undergraduate loans, this percentage is typically 10% of discretionary income. For graduate loans, it's 10% of discretionary income. (Note: This has been recently updated to 5% for undergraduate loans and 10% for graduate loans, or a weighted average for mixed loans). For simplicity in this calculator, we use a representative 10% calculation as a baseline.
Formula:
- Calculate Poverty Guideline: This depends on your family size and state (contiguous US, Alaska, or Hawaii). For simplicity, this calculator uses a general figure.
- Calculate Discretionary Income:
Discretionary Income = Annual Income - (2.25 * Poverty Guideline for Family Size) - Calculate Monthly Payment:
Monthly Payment = (Discretionary Income * 0.10) / 12(This uses 10% of discretionary income for illustration)
The Math Behind the Calculator
This calculator estimates your SAVE Plan monthly payment based on the inputs provided. It also calculates the total amount paid and the total interest over your original loan term.
- Calculate Standard Monthly Payment: First, we determine what your payment would be on a standard 10-year repayment plan. This is calculated using the standard loan payment formula:
M = P [ i(1 + i)^n ] / [ (1 + i)^n – 1]Where:- M = Monthly Payment
- P = Principal Loan Amount (
loanAmount) - i = Monthly Interest Rate (
annualInterestRate/ 12 / 100) - n = Total Number of Payments (
paymentDuration* 12)
- Calculate SAVE Plan Monthly Payment:
- Poverty Guideline Adjustment: We use a simplified approach. The SAVE plan allows 225% of the poverty guideline to be excluded from discretionary income. A commonly used simplified threshold for calculation is around $29,100 for a family of one (for contiguous US). This calculator uses a dynamic exclusion based on the provided family size and a representative poverty guideline factor. For this calculator, we will use an approximate annual exclusion amount which is 225% of a baseline poverty line. Let's use an approximate exclusion of
$14,550 * familySizeas a rough proxy for the poverty line exclusion component, acknowledging this is a simplification. A more accurate calculation would require up-to-date poverty guidelines. - Discretionary Income:
discretionaryIncome = income - (225% * Simplified Poverty Guideline Threshold * familySize). A simplified threshold for 2024 for a family of 1 is roughly $14,550. So, exclusion = $14,550 * familySize. For simplicity, we useincome - (14550 * familySize). Ensure this is not negative; if it is, discretionary income is $0. - SAVE Payment:
SAVE_Payment = (discretionaryIncome * 0.10) / 12. If the calculated discretionary income is negative, the SAVE payment is $0.
- Poverty Guideline Adjustment: We use a simplified approach. The SAVE plan allows 225% of the poverty guideline to be excluded from discretionary income. A commonly used simplified threshold for calculation is around $29,100 for a family of one (for contiguous US). This calculator uses a dynamic exclusion based on the provided family size and a representative poverty guideline factor. For this calculator, we will use an approximate annual exclusion amount which is 225% of a baseline poverty line. Let's use an approximate exclusion of
- Determine Actual Monthly Payment: The borrower pays the lesser of the calculated SAVE Plan payment or the standard 10-year repayment plan payment. This calculator simplifies by showing the SAVE plan calculation result.
- Total Paid:
Total Paid = SAVE_Payment * paymentDuration * 12 - Total Interest:
Total Interest = Total Paid - loanAmount
When to Use This Calculator
This calculator is most useful for borrowers who:
- Have federal student loans.
- Are struggling with payments on a standard repayment plan.
- Want to understand how their income and family size affect their monthly loan obligations.
- Are considering enrolling in an income-driven repayment plan like SAVE.
- Want to estimate potential savings compared to other repayment options.
Disclaimer: This calculator provides an estimation based on the information you enter and simplified assumptions about poverty guidelines and SAVE plan calculation specifics. For precise figures and personalized advice, consult official U.S. Department of Education resources or a qualified financial advisor.