As anyone with Direct student loans likely knows by now, the government has debuted a new payment plan called SAVE that will replace REPAYE. In addition, PAYE will be eliminated soon with borrowers having about a year left to opt into it.
SAVE is significantly better than the REPAYE plan it replaces. You can read about the changes at Ben White’s blog. But it “complicates” decisions for some. Those who had previously chosen PAYE now need to reevaluate whether the new SAVE plan is worth switching to.
Obviously, graduating medical students will need to choose a plan when payment restart. And many others who didn’t think about payment plans during the covid payment pause now need to reevaluate the strategy they had prior to covid.
We’ve updated our two main calculators to help with SAVE vs PAYE comparisons.
The first is our basic Income Driven Repayment Calculator. In addition to showing your payments for SAVE and PAYE, it calculates the maximum payment you’ll have under PAYE, as well as the income needed to reach this maximum. This PAYE “cap” on payments is now the only useful feature of PAYE compared to SAVE.
The second is our SAVE vs PAYE PSLF “Optimizer” tool. Despite the title, it’s useful even for those not seeking PSLF. This tool allows for 10-year projections of income and family size, allowing one to determine which plan will result in the best plan over time. It also illustrates SAVE’s enormous interest rate subsidies and calculates your effective interest rate.
Keep in mind that you should verify all calculations and never trust any one source. We have found errors in every online calculator we’ve tested at various times, including ours (and including at studentaid.gov).