SAVE plan could lower costs for student loan debt
20 million people could benefit from the new program
(InvestigateTV) — The White House recently introduced the Saving on a Valuable Education, or SAVE, plan, as federal student loan payments are set to resume Oct. 1.
Eligible borrowers can enroll in this income-driven repayment plan to lower monthly bills and reduce the amount paid over the life of the student loan.
Once the plan is phased in, some people will see their monthly bills cut in half and the remaining debt canceled after making at least 10 years of payments.
Cherry Dale, a financial coach with the Virginia Credit Union, said single people who make $32,800 a year would qualify for a zero-payment option.
“You do want to keep in mind, they’re not erasing that debt. That debt is still there, right. And you still owe it. And so even if you’re not making those payments on there, that debt load is still in your name,” Dale explained. “However, it won’t impact your credit, or you won’t be in bad standing if you enter into the program and you qualify for those zero payments each month.’
Dale said a qualifying family of four earning $67,500 or less also might not owe a payment.
She said if monthly payments are made, loan balances won’t grow because of unpaid interest.
“Let’s say they don’t owe anything each month. That doesn’t mean they don’t necessarily make any payment. They could still make a $50 payment. They just don’t have to. But if they’re making that $50 payment, it’s going to that principle of the loan. And you are starting to pay that loan down and what you owe,” Dale said.
Borrowers can check their SAVE plan eligibility and apply here.
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