Biden's New Loan Plan: Saving on a Valuable Education (SAVE) will essentially eliminate interest accumulation during Residency

[deleted1139416]

Am I understanding this right?

Here is how the math works out:

You pay only if you make more than 2.25 times the Federal Poverty line, which is around $55K. This alone means that half of US residents won't pay.

Anything above that, and you only pay 10% of the gap

Any additional interest accumulation is forgiven

So those making under 55K in residency will have zero interest accumulation. But even if you make, say 75k, you would only pay $2,000 per year in residency.

EDIT: The above numbers assume 3 person household and all grad loans

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[annoyedpsychiatrist]

Am I understanding this right?

Here is how the math works out:

You pay only if you make more than 2.25 times the Federal Poverty line, which is around $55K. This alone means that half of US residents won't pay.

Anything above that, and you only pay 10% of the gap

Any additional interest accumulation is forgiven

So those making under 55K in residency will have zero interest accumulation. But even if you make, say 75k, you would only pay $2,000 per year in residency.

well this would have been great for me like 3 years ago,lol.. as long as they dont mess with PSLF

 

[Arabia Magna]

Anything above that, and you only pay 10% of the gap

5% for undergraduate loans. 10% for other loans.

 

[deleted1139416]

5% for undergraduate loans. 10% for other loans.

Yes I was referring to those who only have med school loans. But yes, if you have undergrad loans on top of that then you would have an individualized rate between 5-10%.

 

[deleted1139416]

well this would have been great for me like 3 years ago,lol.. as long as they dont mess with PSLF

They won’t. It will replace REPAYE. And the loan interest has been at zero percent for three years now so haven’t you already benefited? Lol.

 

[annoyedpsychiatrist]

They won’t. It will replace REPAYE. And the loan interest has been at zero percent for three years now so haven’t you already benefited? Lol.

that was quite nice but didnt stop all the other interest from accumulating during med school and residency which was still quite a bit

 

[deleted1139416]

I'm shocked that this thread hasn't gotten more comments yet. I thought med students would rejoice at this.

 

[Wolvvs]

Am I understanding this right?

Here is how the math works out:

You pay only if you make more than 2.25 times the Federal Poverty line, which is around $55K. This alone means that half of US residents won't pay.

Anything above that, and you only pay 10% of the gap

Any additional interest accumulation is forgiven

So those making under 55K in residency will have zero interest accumulation. But even if you make, say 75k, you would only pay $2,000 per year in residency.

How did you get to 55K? Looks like the federal poverty guideline for a single person for 2023 is $14,580, x2.25=$32,805

So for someone making $55K, they would be responsible for 10% of the amount over 32805. So 55000-32805=22195*.1=$2,219.50. For someone making 75K, 75000-32805=42195*.1=$4,219.50 per year, about $350 per month. So still not bad at all, but I have no idea how this compares to something like REPAYE

So for someone with $200K in loans, with an interest rate of 6.54% which was the recent rate for federal unsubsidized loans, interest is $13,080 per year. Someone with a salary of $55K therefore would save $10,860.50 per year in interest payments under this program. But again I don't know how that compares to current state.

 

[voxveritatisetlucis]

Will be changed next person in office or by federal court probably

 

[deleted1139416]

How did you get to 55K? Looks like the federal poverty guideline for a single person for 2023 is $14,580, x2.25=$32,805

I'm such an idiot - that was for a 3 person household and I used that because I have a wife and kid 🤦‍♂️🤦‍♂

 

[Wolvvs]

I'm such an idiot - that was for a 3 person household and I used that because I have a wife and kid 🤦‍♂️🤦‍♂

That's definitely a good point though, the impact of this is gonna be hugely affected by your household size, whether you have a partner who's working, and if so, the income differential between your spouse and you. This is probably good news if you have a larger household and a partner who earns less than you (but above the cutoff for the EITC which complicates things). If your spouse earns more than you, there's a tradeoff between filing taxes separately to maximize interest savings vs filing together to take advantage of the marriage bonus. I'm not sure what the exact impact is going to be, but it will be important to calculate things both ways to figure out which makes the most financial sense.

 

[deleted1139416]

That's definitely a good point though, the impact of this is gonna be hugely affected by your household size, whether you have a partner who's working, and if so, the income differential between your spouse and you. This is probably good news if you have a larger household and a partner who earns less than you (but above the cutoff for the EITC which complicates things). If your spouse earns more than you, there's a tradeoff between filing taxes separately to maximize interest savings vs filing together to take advantage of the marriage bonus. I'm not sure what the exact impact is going to be, but it will be important to calculate things both ways to figure out which makes the most financial sense.

Good thing my wife isn't working because she needs to "relax" and "decompress" 24/7

 

[Arabia Magna]

Good thing my wife isn't working because she needs to "relax" and "decompress" 24/7

Happy wife, happy life.

 

[Postictal Raiden]

Good thing my wife isn't working because she needs to "relax" and "decompress" 24/7

Being a mother and a supportive wife is a 24/7 job

 

[FutureInternist]

Happy wife, happy life.

Ummm…

Happy spouse, happy house

#guysdeservetobehappytoo 😏