Keep College Loans Away From Collections

Posted on by The Credit Doctor
The Save plan keeps college loans away from collections

Keep college loans away from collections with the new student loan repayment plan called the Saving on a Valuable Education (SAVE) plan. The SAVE plan is designed to be the most affordable repayment plan ever created, and it could save millions of borrowers money on their monthly payments.

How the SAVE plan works

The SAVE plan is an income-driven repayment (IDR) plan. IDR plans calculate monthly payments based on a borrower’s income and family size, not the size of their student loan balance. This means that borrowers with lower incomes can make smaller payments, and borrowers with higher incomes can make larger payments.

The SAVE plan has several features that make it more affordable than other IDR plans:

  • Monthly payments are capped at 10% of discretionary income. This means that borrowers will never have to pay more than 10% of their monthly income on their student loans.
  • Borrowers never have to make payments that are more than the interest that is accruing on their loans. This means that borrowers’ loan balances will never grow while they are enrolled in the SAVE plan.
  • Borrowers can get their loans forgiven after 20 years of repayment. This is the same forgiveness period as other IDR plans.

Who is eligible for the SAVE plan?

The SAVE plan is available to all borrowers who have federal student loans. However, there are some income and family size restrictions. Borrowers must have a total annual income that is less than or equal to 150% of the federal poverty guidelines for their family size.

How to enroll in the SAVE plan

Borrowers can enroll in the SAVE plan by visiting the Federal Student Aid website. They will need to provide their income and family size information, and they will need to choose a repayment term.

The SAVE plan is a new and affordable student loan repayment plan that could save millions of borrowers money. If you are struggling to make your student loan payments, the SAVE plan may be a good option for you.

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