NASHVILLE, Tenn. (WTVF) — Student loan repayments resume next month after a three-year pause and already four million people have enrolled in President Biden's new student loan repayment plan, the Saving on a Valuable Education plan, or SAVE, and it bases your payments on your income.
The Education Department broke it down as a single person household making about $60,000 annually would have a monthly payment of $227, while a family of four under that same income would pay $0 a month under the SAVE plan.
The department said the program is available for borrowers with a direct loan in good standing.
Current income driven repayment plans for undergraduates calculate that borrowers pay 10 percent of income above 225 percent of the poverty line, which for one person is an income of about $30,500 a year. The SAVE program will cut that to 5 percent.
It could lower the monthly payments of loans for about 20 million borrowers, which is great news, but as payments resume it is smart to think about how you will fit those payments into your budget.
"If you're right already tight on your budget, now is the time to look to figure out ways to save money," said Financial Attorney Leslie Tayne. "Cut back on subscriptions, streaming services, look for other ways to increase your income, supplement income, because you will start receiving notices about repayment."
With the SAVE program people could save up to a thousand dollars a year on repayments.
