The U.S. Department of Education (ED) has recently provided updates regarding the Saving on a Valuable Education (SAVE) Plan and other income-driven repayment (IDR) plans. Due to a federal court injunction, certain parts of the SAVE Plan cannot currently be implemented. Here's what you need to know about the impact on borrowers, repayment options, and future updates.
Key Changes and Current Status of the SAVE Plan
A federal court has prohibited ED from:
- Using the SAVE formula to calculate monthly payments.
- Forgiving loans after a set number of payments under the SAVE, Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans.
The Biden-Harris Administration is defending the SAVE Plan in court to provide more support to borrowers.
What This Means for You
If you are enrolled in the SAVE Plan, you are now in general forbearance, unless you’ve chosen a different status like deferment. Under this forbearance:
- No monthly payments are required.
- Interest will not accrue on your loans.
- Months in forbearance will NOT count toward Public Service Loan Forgiveness (PSLF) or forgiveness under IDR plans.
If you choose to enroll in a different IDR plan, your servicer may place you in processing forbearance for up to 60 days while your application is reviewed. During this time:
- You will not need to make payments, but interest will accrue.
Time in this status does count toward PSLF and IDR forgiveness.
Options for PSLF and IDR Credit
To earn credit toward forgiveness, borrowers can:
- Switch to other IDR plans: Options like PAYE, Income-Based Repayment (IBR), and ICR are still available. Payments made under these plans qualify for PSLF and count toward IDR forgiveness.
- Utilize the PSLF Buyback Option: Borrowers can retroactively make payments to earn PSLF credit for past months spent in an ineligible status. Learn more about this option on the PSLF Buyback information page.
Repayment Timeline Updates
Servicers are making technical updates to comply with the court’s requirements. The new repayment timeline is as follows:
- Borrowers will remain in forbearance until September 2025, at the earliest.
- Monthly payments are expected to resume no earlier than December 2025.
In the meantime, check for updates regularly on StudentAid.gov/saveaction.
Next Steps for Borrowers
- Evaluate your repayment plan: If you want PSLF or IDR credit during this time, consider enrolling in PAYE, IBR, or ICR plans.
- Monitor your loan status: Check communications from your loan servicer for updates on your forbearance type and repayment schedule.
- Stay informed: Visit StudentAid.gov for the latest news and guidance on repayment options.
If you have any questions about these updates or need assistance navigating your repayment options, feel free to contact us. At Modoo Strategy, we’re committed to helping borrowers understand and make the most of their student loan options.
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