What is the difference between save and PAYE?

The SAVE plan has a higher income exemption of 225% of the federal poverty line, compared to 150% for PAYE, leading to lower monthly payments for borrowers.

The SAVE plan provides an interest subsidy for the entire life of the loan, while PAYE only subsidizes unpaid interest for the first three years.

PAYE is generally considered the better option for married borrowers or those with higher incomes, while SAVE may be more beneficial for those with lower incomes or greater financial difficulties.

SAVE bases payments on 10% of the borrower's discretionary income, the same as other income-driven repayment plans, except for some IBR borrowers.

SAVE uses a 20-year repayment plan for undergraduate loans, the same as the time period for the other income-driven repayment plans, except for some IBR users.

The SAVE plan can offer faster loan forgiveness compared to PAYE, as it has a shorter forgiveness period of 20 years for undergraduate loans.

SAVE borrowers are eligible for an interest subsidy on the entire outstanding loan balance, whereas PAYE only subsidizes unpaid interest for the first three years.

The SAVE plan is designed to protect borrowers from high-interest capitalization, which can occur in other repayment plans.

Eligibility for the SAVE plan is based on the borrower's discretionary income, family size, and federal poverty line, similar to other income-driven repayment plans.

The application process for the SAVE plan is streamlined and integrated with the existing income-driven repayment application system.

The SAVE plan offers a more generous income exemption than PAYE, allowing borrowers to retain a larger portion of their income for other expenses.

SAVE may be particularly beneficial for borrowers with high debt-to-income ratios or those who have experienced financial hardship, as it can provide lower monthly payments and faster forgiveness.