Student Loan SAVE Plan Is ‘Not Coming Back In Any Way,’ Warns Official

The Uncertain Future of the SAVE Plan and Its Impact on Student Loan Borrowers

The SAVE plan, introduced by the Biden administration, was designed to offer affordable repayment options and loan forgiveness after 20 or 25 years, with the added benefit of curbing excessive interest accrual. It was particularly advantageous for public service workers seeking forgiveness through PSLF. However, legal challenges, primarily from Republican states, have put the plan in jeopardy, arguing it exceeds Congress’s original intent.

Court rulings, notably from the 8th Circuit Court of Appeals, have blocked SAVE, placing millions of borrowers in forbearance. While no payments are due and interest is halted, this period does not contribute to loan forgiveness, leaving borrowers in limbo. Recent rulings have also cast doubt on forgiveness eligibility under older plans like ICR and PAYE, potentially overturning decades of repayment agreements.

Congress is considering repealing SAVE, and the Trump administration may dismantle it through rulemaking. An official confirmed SAVE’s demise, leaving borrowers to seek alternative plans. Switching to IBR, the only stable option, may result in significantly higher payments, with some facing 300% increases. Additionally, the Department of Education has halted processing of repayment applications, adding to the chaos.

Borrowers in the SAVE plan remain in forbearance until at least September 2025, with payments resuming by December 2025, though this timeline is subject to change. The situation is fraught with uncertainty, leaving millions facing a stressful transition with potentially higher costs and disrupted paths to forgiveness. This scenario underscores the precarious state of student loan repayment options and the urgent need for clarity and stability.