![]() Instead of 10% of your discretionary income, it's going to go down to 5%, which might sound a little weird and tedious, but what it means for borrowers is basically it's going to cut their monthly payments in half. Well, in July - next year, 2024 - for undergraduate borrowers, that's going to drop. But then, right now, borrowers' payments are 10% of that discretionary income of whatever is left, right? So as we said, it exempts more of borrowers' income from being considered discretionary. That monthly payment math that we were talking about earlier - I said SAVE messes with it in two ways. But there's another explanation, and that is, everyone enrolling in SAVE needs to understand that probably the biggest change that's really going to save borrowers money hasn't even happened yet. So sadly, that wouldn't surprise me if that's the explanation. ![]() First, as part of this huge transition of tens of millions of borrowers back to repayment, I will say loan servicers and the Education Department have made a lot of mistakes when it comes to calculating borrowers' monthly payments under SAVE. No, actually, there are two potential explanations here, Scott. One of our producers here has student loans, enrolled in SAVE and discovered that her monthly payment just came down by about $20. SIMON: Well, let me ask for your counsel on something, though. I should also say, Scott, SAVE stands out because whatever interest is not covered by your monthly payment, especially if it's $0 - that interest now gets wiped away. Like we said in the intro, of the 5 1/2 million borrowers who are now enrolled in SAVE, more than half, almost 3 million of them, have one of these $0 monthly payments. Shorthand, that means a lot more borrowers will now qualify for essentially a $0 monthly payment, because the federal government says you don't have any discretionary income. And one thing that SAVE does is it increases how much income is considered off-limits. So, for example, monthly loan payments are not based on all of a borrower's income, just on what is considered extra or discretionary. Now, this isn't a new idea, but what is new is SAVE is a lot more generous than anything that's come before. So the less they make, the less they have to pay each month. It is fundamentally a repayment plan that bases a borrower's monthly payment on their income. ![]() TURNER: So bear with me here for a second. SIMON: SAVE, of course, stands for Saving on a Valuable Education. Cory, thanks so much for being with us.ĬORY TURNER, BYLINE: Thanks for having me, Scott. That's in part because of a new repayment plan known as SAVE. As of November, nearly 3 million federal student loan borrowers had monthly payments of $0, according to the U.S.
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