SAVE Plan & Income-Driven Repayment (IDR) Calculator
Evaluate discretionary income exemptions under the Saving on a Valuable Education (SAVE) plan, including 225% poverty line threshold, interest subsidies, and 20/25 year forgiveness.
SAVE Plan & Discretionary Income Repayment Engine
Simulate payments under the 225% poverty guideline protection with undergraduate (5%) and graduate (10%) splits.
1. Borrower Tax & Income Profile
Found on Line 11 of your IRS Form 1040. If married filing jointly, include combined AGI.
2. SAVE Plan Payment & Forgiveness Projections
Balances remaining after 20/25 qualifying annual recertifications are discharged. See tax rules regarding post-2025 forgiveness expiration.
The Mechanics of the SAVE (Saving on a Valuable Education) Plan
The Saving on a Valuable Education (SAVE) plan replaces the former REPAYE framework as the most borrower-favorable income-driven repayment structure created under the Higher Education Act. SAVE implements three structural safeguards that fundamentally change federal debt dynamics:
- 225% Federal Poverty Line Exemption: Unlike older plans (IBR, PAYE, ICR) that protected only 150% of the federal poverty guideline, SAVE shields 225% of the HHS poverty threshold from repayment calculations. For a single borrower in 2025/2026, roughly $35,200 of earnings is completely exempt.
- 5% Undergrad Payment Cap: Repayment obligations on undergraduate debt are capped at 5% of discretionary income (down from 10%), while graduate debt remains at 10%. Borrowers with a combination pay a proportional weighted average between 5% and 10%.
- 100% Interest Subsidy (No Negative Amortization): If your scheduled monthly payment does not cover the month's accrued interest, the federal government waives the excess. Your loan balance will never increase due to unpaid interest as long as you maintain on-time SAVE installments.
Regulatory Status & Legal Injunctions Update
Due to federal court rulings and pending litigation in the 8th Circuit Court of Appeals, portions of the SAVE plan experienced implementation pauses and administrative forbearance. Borrowers transitioning from former VSAC servicing or other platforms should monitor our SAVE Plan Injunction Analysis Guide for real-time compliance steps.
Comparative Income-Driven Repayment (IDR) Formulas
| Plan Name | Discretionary Threshold | % of Discretionary Income | Forgiveness Timeline | Interest Subsidy |
|---|---|---|---|---|
| SAVE | 225% of Poverty Line | 5% (Undergrad) / 10% (Grad) | 20 yrs (Undergrad) / 25 yrs (Grad) | 100% of unpaid monthly interest |
| PAYE | 150% of Poverty Line | 10% capped at standard | 20 Years | Subsidized loans only (first 3 yrs) |
| IBR (New Borrowers) | 150% of Poverty Line | 10% capped at standard | 20 Years | Subsidized loans only (first 3 yrs) |
| ICR | 100% of Poverty Line | 20% of discretionary | 25 Years | None (Interest capitalizes up to 10%) |
How Discretionary Income is Calculated
Discretionary income is calculated annually based on your federal tax return (Line 11 AGI on Form 1040). You must recertify your income each year with your loan servicer (such as AES or Aidvantage). If you fail to recertify, your monthly payment automatically reverts to the standard 10-year amount, and unpaid interest may capitalize depending on specific plan provisions.
Frequently Asked Questions
What happens if my SAVE monthly payment is calculated at $0.00?
A $0.00 payment under SAVE is considered a qualifying, on-time payment. It advances your count toward 20- or 25-year IDR forgiveness as well as Public Service Loan Forgiveness (PSLF) without requiring a single dollar out of pocket.
Does the SAVE interest subsidy eliminate existing balance?
No. The subsidy prevents NEW interest from accumulating beyond your payment. It does not erase previous principal or interest that accrued prior to enrolling in SAVE.
Can Parent PLUS loans be paid under the SAVE plan?
Direct Parent PLUS loans are not directly eligible for SAVE. However, borrowers who execute a double consolidation loophole before July 2025 can qualify consolidation loans for SAVE.
Other In-House Tools
Former VSAC federal borrowers now manage monthly installments through American Education Services.
Read AES Login Guide →