At the 💃beginning of the summer, Gaelle Gilles was bracing for a big hit to her finances. 

Gilles is among mꦿillions of people with federally held student loans preparing for a kind of financial D-Day: the Oct. 1 return of student loan payments, when the pandemic-era pause is set to end. This deadline will bring back what for many borrowers is one of their largest monthly bills. 

Gilles is a 28-year-old software engineer who lives in Scotch Plains, New Jersey, and graduated with a master’s degree from Pace University last year. She was on track for a monthly student loan payment of $90𝕴0, a big bite out of the $70,000-a-year salary she makes at her first p𒆙rofessional job.

That all changed in August when she applied to switch repayment on her $125,000 in student loans to the SAVE plan, a new kind o🌱f income-driven repaymen♑t plan launched this summer by the De🔜partment of Education. The plan is designed to offer borrowers lower monthly paymen🌞ts and less hassle than older plans.

“When the Biden administration came out with that, I w🌳as glad. When I was actually approved, I was like, ‘Oh, OK, this can definitely help out,’ ” Gilles said. “I was nꩵot expecting it to go down as low as $300.”

Gilles and her fellow student loan borrowers must figure out how to fit another hefty monthly bill into household budgets that have been squeezed by inflation and altered by changes to the 💧job market during the pandemic-era pause. There are new options for repayment and even new wa☂ys to pursue having loans forgiven. In short, the old rules no longer apply. 

How The SAVE Plan Helps

The SAVE plan may not be as flashy as President Joe Biden’s ill-fated proposaꦍl to forgive up to $20,000 of student debt per borrower, but it ಞcould transform how present and future borrowers repay their loans. 

“The headlines have absolutely been dominated by forgiveness," said Lindsay Clark, director of external affairs for Savi, a financial technology company that helps borrowers optimize their student loan repayment. "I think a lot of people were hoping and banking on that, and I don't think that this new repayment plan has gotten quite the attention that maybe it would have if forgiveness wasn't an option."

Unlike traditional student loans, where borrowers make payments based on how much they owe, the SAVE plan is 澳洲幸运5开奖号码历史查询:income-driven, meaning borrowers pay based on how much they earn. The SAVE plan is much more generous to borrowers♕ than previous income-driven repayment (IDR) plans. 

Under SAVE, payments are 10% of the borrower’s disposable income, defined as whatever they make beyond 225% of the poverty line. That means borrowers who make $32,800 or less will have payments of $0. After borrow🐭ers make payments—even $0 payments—for 20 years (or 25 for graduate school loans), any remaining bal❀ance is forgiven. 

The plan has advantages over older IDR plans. Notably, if borrꦏowers’ monthly payments under SAVE are less than the interest charged on their loans, any remai🉐ning interest is waived. That means interest never builds up as long as borrowers keep making their required payments.

Starting next year, borrowers with initial balances of $12,000 or less will have their loans forgiven after 10 years instead of 20 or 25, shortening the time that they’re in repayment. (That time goes up by one year for every $1,000 beyond $12,000, up to a maximum of 20 or 25.)

As of September, 4.1 million people had enrolled in SAVE, including borrowers on the older REPAYE income-driven plan who were automatically shifted over, the White House said.
Still, the SAVE plan doesn’t benefit everyone. Borrowers w♈ith higher incomes may have higher loan payments under SAVE thꩲan with other plans.

The Department of Education offers a into which borrowers can input their financial details and estimate their monthly payments, and how much they’d pay by the end of the loan, under different payment plans, including SAVE. Borrowers can also call their 澳洲幸运5开奖号码历史查询:student loan servicer to get more specific inf🃏ormation about their opไtions under different plans. 

“The name of the game is paying the least amount over time,” said Betsy Mayotte, president of the Institute of Student Loan Advisors, a nonprofit group that offers free advice to student loan borrowers. “For some people, that means pursuing forgiveness. For other people, that means paying their loans off as aggressively as possible. I've already talked to a lot of borrowers, [who] run their numbers through the Department of Ed’s calculator, and they're like, ‘Well the SAVE plan doubles my payment and I can't afford it.’”

Still, taken together, the plan changes the economics of 澳洲幸运5开奖号码历史查询:student loan borrowing so much that it could encourage future borrowers who might otherwise be intimidated by the prospect of repaying loans, to go 🎃to college, Savi’s Clark said.

“It takes a ton of pressure off of borrowers, especially those just entering the workforce, knowing there are options that can make going into repayment on their student loan far more manageable and affordable when the time comes,” she said. “To know that you could qualify for as low as a $0 monthly payment once graduating and going into repayment i💦s a game changer.”

This article is the first in a five-part series reviewing the changes to the student loan landscape over the three years that payments on federal student loans have been paused. Subsequent installments will cover the changing financial situation of borrowers, changing rules for interest accumulation, how millions of borrowers got their loans forgiven under Biden, and other ways that the rules have been altered.