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Which Student loan plan is better SAVE Plan, PAYE Plan or IBR?

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Abbey Johnson, Helping with Student Loan Documentation
Answered on October 02,2023

SAVE is generally the best because your interest does not accumulate if you pay the minimum payment. In most other plans, the minimum payment may be low but it's not enough to even cover the interest payment every month. As a result your interest accumulates.

SAVE has no monthly payment cap. So if your income goes up a lot you may have a higher payment than on the other plans.

Several of the other plans are closing to new people including PAYE. You should strongly consider PAYE because forgiveness is after 20 years rather than 25 on SAVE.

Unfortunately, you'll have to choose between SAVE and PAYE even though SAVE is better in the short run, PAYE may be better in the long run and you won't be able to enter it later.

SAVE is likely your best bet if you're currently unemployed. As per SAVE Plan your non-existent income will result in a $0/month payment and the monthly accruing unpaid interest will be waived each month.

PAYE and IBR do not waive the unpaid monthly interest.

You can switch to another plan once you're employed if it makes sense. The only hard deadlines I'm aware of are that they are sunseting PAYE July 2024, and you won't be able to switch to IBR after you make 60 monthly payments on SAVE

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Guide

Ultimate Guide on SAVE Plan - Payment Calculation, Interest, Forgiveness

Under the Saving on a Valuable Education (SAVE) plan, a single borrower who makes less than $15 an hour will not have to make any payments. Borrowers earning above that amount would save mor..
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