It looks like the end of the line for SAVE after a US appeals court blocked the student loan debt relief program. And options for alternative lower-payment plans are dwindling.
The 8th Circuit Court of Appeals ruled (PDF) last month that former President Joe Biden's administration exceeded its authority by designing the Saving for a Valuable Education plan to largely forgive loans rather than requiring borrowers to repay them.
TAX SOFTWARE DEALS OF THE WEEK
Deals are selected by the CNET Group commerce team, and may be unrelated to this article.
At the time, experts encouraged SAVE borrowers to investigate other income-driven repayment plans. However, the Department of Education recently closed applications for all IDR plans. And now it looks more likely that the Department of Education will be dismantled, leaving borrowers with even more questions.
"Many borrowers have wondered what would happen to their student loan balances if the US Department of Education were to be eliminated," Elaine Rubin, a student loan policy expert and director of communications for Edvisors, said in an email. "In such a scenario, the federal student loan program would likely be transferred to another agency."
Most experts predict management of student loans will be reassigned to the Treasury Department. Current borrowers should expect the same terms as when they originally accepted the loan. While the SAVE plan has been stuck in limbo, borrowers have been told their payments would likely remain on pause until December.
SAVE, which offered millions of borrowers lower monthly payments and a shorter timeline for loan forgiveness, was challenged by Republicans after its launch in 2023. President Donald Trump has made it clear he isn't a fan of broad student loan forgiveness, and experts don't expect him to defend the plan.
If you're worried about the fate of your student loans, here's what you need to know.
Why was SAVE blocked?
The Biden administration launched SAVE with an executive order in August 2023. It lowered monthly student loan payments and offered multiple paths to forgiveness.
Seven Republican-led states, opposed to broad student loan forgiveness, sued to block the plan, saying the Department of Education overstepped its authority by modifying the existing student loan repayment plan that had been approved by Congress.
A federal court issued an injunction in 2024 that prevented the department from using the SAVE plan to forgive loans that had earned forgiveness under the SAVE, Pay As You Earn, or PAYE, and income-contingent repayment plans, or ICR.
What happens to my student loans if I'm enrolled in SAVE?
It's unclear if SAVE borrowers will automatically be enrolled in a standard repayment plan or if other IDR plans will become available again.
The timeline for rolling over loans is also unclear, although experts predict borrowers will likely have 90 days or less to move to another plan.
"If you're currently enrolled in SAVE, my advice is to stay informed and proactive," said Ken Ruggiero, CEO of Ascent Funding, a private student loan lender. "While legal challenges unfold, your loan servicer should continue processing payments as usual."
Even though SAVE is gone, there are still options for borrowers seeking relief, including income-based repayment plans, or IBR. However, not all SAVE borrowers will be eligible to enroll, and payments will likely be higher.
It's a smart idea to review alternative repayment options using the student loan simulator from StudentAid.gov. You'll be able to compare different payment plans and get an idea of what your new monthly payment will look like.
If you're in the Public Service Loan Forgiveness Program and close to meeting the 120 payments required for forgiveness, consider enrolling in the PSLF Buyback program. Eligible borrowers can make up payments that were skipped during forbearance.
For now, keep an eye out for emails from the student aid office and your servicer, and check StudentAid.gov/saveaction for updates.
English (US) ·