Your Student Loan Payments Could Be Cut in Half Under New Program
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Here's your money briefing for Thursday, September 28th. I'm J.R. Whelan for The Wall Street Journal. Student loan borrowers are set to resume making monthly payments on October 1st, but money is tight for many people. A new repayment program known as SAVE could give them a break.
So someone who feels that their payments are too burdensome, that they could benefit from a lower payment, or they've seen their income or their family size change since they last were making payments three years ago, could benefit from SAVE.
We'll talk to Wall Street Journal reporters Julia Carpenter and Gabe Rubin after the break.
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Student loan borrowers, wary of how they'll make their monthly payments along with all their other bills, have an option that could significantly ease the financial pressure. But it's tricky. So let's bring in WSJ reporters Julia Carpenter and Gabe Rubin for more on the SAVE program. So, Julia, what is SAVE and how would it benefit borrowers?
SAVE is a new income-driven repayment program. It stands for the Saving on a Valuable Education Plan, and it could potentially benefit borrowers by lowering their monthly payments and speeding up the path to forgiveness.
What is the SAVE repayment program and who introduced it?
So why would someone consider enrolling in it, and how would they do that?
So someone who feels that their payments are too burdensome, that they could benefit from a lower payment, or they've seen their income or their family size change since they last were making payments three years ago, could benefit from SAVE. And they can enroll by going to studentaid.gov or contacting their servicer and talking to them directly.
Who's eligible for the SAVE program?
So there's actually no income limit on SAVE. So they calculate your monthly payment by your family size and your income.
So if somebody signs up for save, do these savings go into effect right away?
You do have to be processed. So we've heard from a couple of people who've already applied that their applications are still pending. And the Department of Education says you should hear back within four weeks or so.
And during that period, would interest continue to accrue on their loan?
So if you've applied to save and you're in that period of time where you're waiting to see if you've been accepted into the program or you're waiting to see what your final monthly payment would be, your loans will be placed into forbearance. So that means during that period of time, you won't have to make payments while you're waiting to see if you'll be accepted, but interest will continue to accrue on your loan.
How much will people have to pay per month if they enroll and save?
So it's calculated based on your income and your family size. And the thing that's different with save is that they are setting aside a certain amount of money as discretionary income. And that's money that you have for taxes, for necessities. They're setting that aside and they are not counting that toward what you have to pay.
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