Student Loan SAVE vs PAYE Calculator

How SAVE and PAYE Determine Payments

The Saving on a Valuable Education (SAVE) plan replaced REPAYE in 2023 and dramatically lowered payments for undergraduate borrowers by reducing the assessment rate to five percent of discretionary income. Graduate debt remains at ten percent, but borrowers with a mix of debt receive a weighted rate. Pay As You Earn (PAYE), introduced in 2012, charges ten percent of discretionary income but caps payments at the amount you would pay on the standard ten-year plan. Both plans forgive remaining balances after twenty or twenty-five years, yet the mechanics behind payment calculations differ enough that running a side-by-side comparison is essential. This calculator mirrors Department of Education formulas by determining discretionary income, applying plan-specific percentages, and simulating payments over the forgiveness timeline.

Discretionary income equals adjusted gross income minus a multiple of the federal poverty guideline for your household size and state of residence. SAVE uses 225 percent of the poverty guideline, while PAYE uses 150 percent. Because poverty guidelines vary between the contiguous United States, Alaska, and Hawaii, the form includes a residence field that adjusts the baseline. Family size includes you, your spouse, your children if you provide more than half of their support, unborn children who will be born during the year, and other dependents claimed on your tax return. Selecting the correct family size is crucial; an additional dependent can reduce discretionary income by thousands of dollars, significantly lowering monthly payments.

Filing status drives how spousal income is treated. Under SAVE, spousal income is excluded if you file taxes separately and do not live together, though documentation may be required. Our model treats married filing separately as using the borrower’s AGI alone and married filing jointly as including spouse income. PAYE follows similar rules but requires that you were a new borrower as of October 1, 2007, with a qualifying disbursement after October 1, 2011. Because eligibility hurdles can disqualify some borrowers from PAYE, the calculator assumes you meet the requirements and focuses on the payment mechanics. Adjust the spouse income input to reflect your tax filing strategy and housing situation.

Simulating Repayment and Forgiveness

Income-driven repayment plans recertify income annually. Payments typically change as AGI grows or shrinks. For simplicity, this calculator treats the initial monthly payment as constant and projects the total paid over the relevant term. While the approach understates variability, it offers a clear baseline for comparing plans. We use an amortization loop that adds monthly interest, subtracts the scheduled payment, and tracks remaining balance. If the payment is lower than accrued interest, SAVE prevents balance growth by subsidizing the excess interest. We mimic that behavior by capping the balance at the original principal whenever the SAVE payment fails to cover interest, reflecting the plan’s 100 percent interest subsidy. PAYE offers only a partial interest subsidy on subsidized loans for three years, so our simplified model allows the balance to increase if payments are below interest. The table shows total payments and the amount forgiven at the end of the term.

Forgiveness timing varies. SAVE forgives undergraduate-only debt after 240 months (twenty years) and mixed or graduate debt after 300 months (twenty-five years). PAYE forgives after 240 months, regardless of loan type. If your undergraduate share is 100 percent, the calculator assumes SAVE forgives after twenty years. Otherwise, it uses twenty-five years. Because real income-driven repayment recertifies each year, you should revisit the calculator whenever your income changes materially. The comparison nevertheless highlights how the lower assessment rate under SAVE can reduce payments and increase forgiveness, particularly for borrowers with large balances relative to income.

Standard Repayment Benchmark

The standard ten-year plan remains a useful benchmark, even if you cannot afford it today. Our form optionally accepts the standard payment. If you leave the field blank, we calculate it using your loan balance and interest rate over 120 months. Comparing income-driven payments to the standard amount reveals whether PAYE’s payment cap will bind. If the calculated PAYE payment exceeds the standard amount, the law limits you to the standard payment, preventing negative amortization. SAVE has no such cap, which is why its payments can fall far below the standard plan. Including the standard benchmark in your summary helps you evaluate the trade-off between lower monthly payments and potential tax consequences at forgiveness.

Speaking of taxes, forgiven balances under current law are taxable beginning in 2026 unless Congress extends the American Rescue Plan’s exclusion. That means a large SAVE forgiveness amount could trigger a significant tax bill. Prepare by estimating your tax bracket in the projected forgiveness year and setting aside savings or considering strategies like contributing to retirement accounts to offset the income. The calculator’s forgiven balance output gives you a starting point for those discussions with a tax professional.

Planning Tips and Next Steps

Use the copy button to save the narrative summary and share it with your loan servicer or financial planner when reviewing recertification paperwork. If your income is expected to rise rapidly, rerun the numbers annually to project how payments might climb. Because SAVE allows monthly payments as low as zero when income falls below the 225 percent threshold, it provides a safety net during career transitions. PAYE can be advantageous for borrowers who expect significant earnings later because the standard plan cap limits payment spikes. Evaluate whether you qualify for Public Service Loan Forgiveness (PSLF) as well; PSLF forgives remaining balances after 120 qualifying payments while working in public service, and both SAVE and PAYE count as qualifying plans.

Case studies can help you interpret the numbers. Imagine a social worker earning $48,000 with $70,000 of undergraduate loans. SAVE sets payments near $90 per month, keeping the balance steady thanks to the interest subsidy, and forgives roughly $45,000 after twenty years. PAYE requires closer to $180 per month and forgives about $28,000. Seeing the contrast clarifies how income and loan type shape outcomes. Try adjusting the undergrad share or income growth assumptions to mirror your own path and note how the forgiveness amount shifts.

Another borrower might hold $120,000 in graduate PLUS loans while earning $95,000 as a new attorney. In that case, SAVE and PAYE both use a ten percent assessment, yet the higher poverty multiplier still lowers SAVE payments by a few hundred dollars. Because the debt is entirely graduate-level, SAVE forgiveness arrives after twenty-five years, matching the PAYE timeline. Modeling high-income trajectories illustrates when refinancing to a lower fixed rate or aggressive payoff plan may beat IDR altogether.

Finally, remember that accurate annual recertification is essential. Submit income documentation promptly each year to avoid being placed on an expensive alternative plan. Keep digital copies of pay stubs, tax returns, and family size certifications. Update your servicer when marital status or dependents change, as those adjustments directly influence payments. By combining this calculator with diligent recordkeeping, you can maximize the benefits of income-driven repayment while preparing for long-term financial goals such as homeownership, retirement saving, or family planning.