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Understanding the SAVE Program: When It Might Not Be Right for You

Melanie Meths A|Loan Guides|June 22, 2024
Understanding the SAVE Program: When It Might Not Be Right for You

Navigating student loan repayment options can be challenging, especially with the introduction of new programs like SAVE (Saving on a Valuable Education). This blog post delves into the nuances of the SAVE program, specifically focusing on when it might not be the best fit for certain borrowers. We'll also cover important details not included in our previous discussions.

Key Updates on SAVE

The SAVE program, a part of recent government updates, uses 5% of discretionary income to calculate payments for undergraduate loans. This shift can lead to a recalibration of your payments, and it's crucial to stay informed about these changes. For detailed information, refer to our previous video linked in the description.

When SAVE Might Not Be Right for You

While SAVE offers significant benefits, it's essential to consider whether it aligns with your financial goals and situation. Here are scenarios where SAVE might not be the best option:

  1. High Earners: If you anticipate a significant increase in your income, particularly after graduate school, SAVE may not be suitable. Unlike other repayment plans, SAVE does not cap your payment. For example, if you earn $200,000, your payments could be substantially higher than with other plans.
  2. Aggressive Repayment Goals: If you plan to aggressively pay off your loans after major financial milestones, such as buying a house or getting married, SAVE might not support these goals as effectively as other plans.
  3. Mortgage Considerations: Enrolling in SAVE can affect your ability to secure certain types of mortgages, especially if it results in a $0 student loan payment. This is particularly relevant for FHA borrowers.
  4. Switching Plans: After July 1, 2024, you cannot switch back to Pay As You Earn (PAYE) or Income-Contingent Repayment (ICR) from SAVE. If you are unsure about your future financial trajectory, enrolling in PAYE might provide more flexibility.

Important Specifics

  • Repayment Periods: Your repayment period under SAVE changes based on the amount borrowed. For undergraduate loans under $12,000, the repayment period is capped at 10 years. For every additional $1,000 borrowed, the repayment period increases by one year, up to a maximum of 20 years. Graduate loans have a repayment period of up to 25 years.
  • Income Considerations: SAVE calculates payments differently for undergraduate (5% of discretionary income) and graduate loans (10% of discretionary income).

Advantages of SAVE

Despite its potential drawbacks, SAVE offers several benefits:

  • Interest Forgiveness: Year-over-year interest forgiveness prevents negative amortization, ensuring that unpaid interest does not accumulate.
  • Lower Payments: For those with lower incomes, SAVE significantly reduces monthly payments compared to standard plans.

Making an Informed Decision

It's crucial to assess your financial situation and future goals before enrolling in SAVE. Here are some steps to help you decide:

  • Evaluate Your Income Potential: Consider your expected income growth, especially if you plan to attend graduate school.
  • Understand Your Financial Goals: Whether it's buying a house, paying for a wedding, or aggressively paying off loans, ensure your repayment plan aligns with these goals.
  • Consult a Financial Advisor: If you have a complex financial situation, seek advice from a financial advisor to understand the implications of different repayment plans.


The SAVE program offers significant benefits but is not the right fit for everyone. High earners, those with aggressive repayment goals, and individuals considering specific mortgage types should carefully evaluate their options. Always consider your long-term financial plans and consult with a financial advisor to make the best decision for your unique situation.

For more detailed information on the SAVE program and other student loan updates, watch our previous videos and subscribe to our channel for ongoing updates. If you have questions or need personalized advice, feel free to comment or reach out directly.

If you need personalized assistance or have questions about your specific situation, our experts at LoanSense are here to help. Visit our website at to learn more about our services and get in touch. You may also check out our YouTube Channel for more informative discussions and topics related to student loan debt.

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