How-to Series: Calculating Your SAVE Monthly Payment

Welcome to my very first "How-to Series" where I show you how to calculate your monthly payment under the SAVE plan!

I don't trust loan servicers to calculate the monthly payment accurately, so I encourage loan borrowers to understand how to calculate it themselves so they can double-check the math! Keep reading for a step-by-step breakdown of how to do this. Please note that this math takes effect on July 1, 2024.

Let's break it down step-by-step together. You can do this old-school style with a pen and paper or in an Excel file I created - whatever works best for you!

Step 1: Write down your Adjusted Gross Income (AGI) from line 11 on your 2023 tax return. If your current income is less than this, use that instead.

Step 2: Use this chart to determine the 225% Federal Poverty Guideline for your state and family size. Write it down. This is your income protection threshold (IPT), meaning the income protected from student loan payments, so it's not used in the monthly payment calculation.

Step 3: Subtract your income protection threshold (IPT) from your adjusted gross income (AGI). This is your discretionary income. Write this down. This is what they'll use to calculate your monthly student loan payments.

Step 4: Next, we must determine whether they'll multiply your discretionary income by 5%, 10%, or a weighted average when calculating your monthly payment. This depends on whether your loans are from undergrad only, grad only, or a mix of both. 

• Undergrad only: 5% (.05 in Excel)
• Grad only: 10% (.10 in Excel)
• A mix of undergrad and grad: Weighted average. Use my handy Excel file to help calculate this.

Step 5: Multiply your discretionary income (calculated in Step 3) by 5%, 10%, or the weighted average (calculated in Step 4). This is your annual payment.

Step 6: Divide the annual payment by 12 to get the monthly payment. This is your NEW monthly payment under the SAVE plan as soon as you re-certify your income and family size any time after July 1, 2024. Your recertification date is listed on your studentaid.gov account and will be as early as fall 2024.

I hope you found this helpful! If you have any questions, comment below or email me at emma@perkplanning.com.