SAVE Plan Helps Service Members, Civilians Alike With Student Loan Debt

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  • DOD News

The "Saving on a Valuable Education," or SAVE plan, announced in August 2023, is not just for civilians. Service members, family members and civil servants alike can also benefit from the program to help reduce or even eliminate student loan debt.

The SAVE plan, managed by the Department of Education, is an income-driven repayment plan that calculates payments based on a borrower's income and family size — not their loan balance — and forgives remaining balances after a certain number of years. 

The SAVE plan will cut monthly payments for many borrowers to zero, will save other borrowers around $1,000 per year, will prevent balances from growing because of unpaid interest and will get more borrowers closer to forgiveness faster. 

For those who qualify, savings provided by the SAVE plan can help military families reduce monthly expenditures, which in turn reduces financial stress by making more money available to pay for expenses such as child care. 

"Anytime you can eliminate or reduce a financial burden, you then help to eliminate or reduce some of the financial stressors on a family," said Andy Cohen, the director of DOD's Office of Financial Readiness. "We know that for families that have financial stress, it affects the overall well-being of the family." 

Financial stress also affects a service member's ability to focus on their job and their propensity to reenlist, both of which affect military readiness.

"People who are financially stressed are prone to other potential problems such as family stress and job dissatisfaction," said Stephanie Miller, deputy assistant secretary of defense for Military Personnel Policy. "That's why corporate America has financial well-being programs for their employees — it's a return on investment. In DOD, we also take care of our people. The Department gets a return on investment when it comes to service members having a better focus on the mission, we see some readiness protection, and hopefully, we see less personnel turnover."

In part, the SAVE plan cuts payments on undergraduate loans in half. Borrowers with undergraduate loans will have their payments reduced from 10% to 5% of their discretionary income. Those who have undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income based on the original principal balances of their loans. 

The SAVE plan also ensures monthly payments for student loans is based on a borrower's discretionary income — defined under the SAVE plan as the difference between their adjusted gross income and 225% of the U.S. Department of Health and Human Services Poverty Guideline amount for their family size. This part of the plan will reduce monthly loan repayments for many, and for some will mean they have no monthly payments. 

With reduced payments for many, interest charges will also go down, meaning that borrowers who pay what they owe as part of the plan will no longer see their loans grow due to unpaid interest. 

And finally, for some student loan borrowers, their balance may be completely eliminated. Under the SAVE plan, for instance, borrowers whose original principal balances were $12,000 or less will receive forgiveness on their loans after making 120 payments. 

Those interested can learn more about the program on the Federal Student Aid website.

Service members and their families can also learn more about the SAVE program by talking with a military financial advisor, said Cohen. 

"The department has personal financial counselors that service members can reach out to, either at their installation, Family Readiness center, or online through Military OneSource," he said. "They can talk to a financial counselor about not only student loan debt, but managing any other debt they might have, and creating a spending plan." 

Financial counselors can also discuss with service members and their families two other programs to help with student loan debt repayment, Cohen said. 

One such program is the Public Service Loan Forgiveness Program. Under this program, he said, enrolled service members, civil service employees and employees of non-profit organizations may qualify for complete forgiveness of their loan if they have made 120 qualifying payments and are working full time for a qualifying public service employer. 

Another program, Cohen said, is the Zero Percent Student Loan Interest Relief program. Under this program, uniformed service members are exempt from paying student loan interest for up to 60 months on certain student loans while serving in an area that qualifies for hostile fire or imminent danger pay.

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