The Biden administration’s SAVE plan, which aimed to provide affordable repayment options for student loan borrowers, is currently facing significant delays due to a series of legal challenges. The program, officially known as the Saving on a Valuable Education plan, has been put on hold indefinitely while the White House navigates these legal hurdles. With approximately 8 million borrowers enrolled in SAVE, the implications of these delays are far-reaching.
Since its introduction in the summer of 2023, the SAVE plan has been embroiled in controversy. Touted as the most affordable student loan plan ever by the Biden administration, SAVE offers lower monthly payments than any other federal repayment plan and expedites debt erasure for borrowers with small balances. However, Republican-led states have challenged the legality of the program, arguing that the Department of Education overstepped its authority in implementing SAVE as a workaround to student debt forgiveness.
Despite the legal challenges, the Education Department has already forgiven $5.5 billion in student debt for over 400,000 borrowers through the SAVE plan. Those who have received relief are not impacted by the current pause in the program. Borrowers currently enrolled in SAVE are experiencing a pause in federal student loan payments, with the Education Department placing them in administrative forbearance. During this period, interest accrual is suspended, mirroring the relief provided during the Covid-era payment pause.
The duration of the forbearance period remains uncertain, with higher education expert Mark Kantrowitz speculating that it could last for months or even a year. The potential involvement of the Supreme Court in resolving the legality of the SAVE plan adds further complexity and could prolong the delays. Unlike previous payment pauses, the months spent in forbearance under SAVE do not count towards borrowers’ timeline for loan forgiveness, impacting those pursuing options like income-driven repayment plans or Public Service Loan Forgiveness.
Although the pause in loan payments may hinder progress towards debt forgiveness, borrowers are encouraged to explore alternative options. The Education Department offers a buyback option for borrowers pursuing Public Service Loan Forgiveness, allowing them to retroactively make payments to maintain their progress towards debt relief. Additionally, switching to another income-driven repayment plan is a potential strategy for borrowers seeking to preserve their credit history during the forbearance period, though this process may take several months to complete.
Despite the challenges posed by the legal delays, SAVE enrollees are still benefiting from the opportunity to have a $0 monthly payment. While the pause may result in a temporary setback in the journey towards debt forgiveness, borrowers are reminded by experts like Kantrowitz that they do not lose anything tangible, aside from time. As the Biden administration continues to defend the SAVE plan in court, borrowers are advised to stay informed about their options and remain proactive in managing their student loan obligations.
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