Financial expert explains the new SAVE student loan repayment plan

FILE - A tassel with 2023 on it rests on a graduation cap as students walk in a procession for...
FILE - A tassel with 2023 on it rests on a graduation cap as students walk in a procession for Howard University's commencement in Washington, Saturday, May 13, 2023. A Biden administration rule aimed at making it easier to obtain student loan debt relief for people who say they were victims of misleading information about the quality of education they would receive at the colleges or universities where they enrolled was put on hold Monday, Aug. 7, by a federal appeals court in New Orleans.(Alex Brandon | AP Photo/Alex Brandon, File)
Published: Sep. 12, 2023 at 9:24 PM CDT|Updated: Sep. 12, 2023 at 10:59 PM CDT
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BIRMINGHAM, Ala. (WBRC) - You may have heard about the new “Saving on a Valuable Education” or SAVE repayment plan for federal student loans.

A Birmingham-area financial expert explains how this could impact you as loan payments are set to resume October 1, and not everyone will be able to get a lower monthly payment under the new SAVE plan.

It’s an income-driven repayment program and the White House says borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their income under this plan. That means if you make more than you did 3 years ago when payments were paused, you could owe more each month than you did before the pandemic.

Others might not owe any monthly payments though, like someone making $15 an hour or less.

Financial experts say it’s not really a one-size-fits-all plan. Marshall Clay, a senior advisor at The Welch Group, explains that it all depends on you and your individual circumstances.

“If you’re fortunate enough to be making more money, you may not really benefit from this all that much whereas if you’re making the same amount of money or maybe even less and maybe you’re married or something like that and you can file separately, it may disproportionately benefit those people,” he said. “So, it’s really case-by-case specific.”

Borrowers can check their SAVE plan eligibility and apply here.

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