The Saving on a Valuable Education (SAVE) program, an income-driven repayment plan for federal student loans, was launched in 2023 by the Biden Administration. However, SAVE was put on hold in the summer of 2024 because of court challenges. As of December 2024, SAVE is still frozen. This limbo is expected to continue until at least April 2025, according to the Department of Education (DOE).
All SAVE participants are in forbearance, meaning if you are enrolled in the SAVE repayment plan, you don’t have to make any payments until the courts decide the program’s future. You can still enroll in SAVE, but if your application is accepted, your account will be placed in immediate forbearance. The DOE is advising those who seek an income-driven repayment plan to either sign up for SAVE or an alternative plan.
Here’s what you need to know about the SAVE program, its history and current status, and the alternatives you can pursue to lower your payments on your federal student loans.
History of the SAVE Plan
In August 2023, President Joe Biden originally announced the creation of the SAVE plan. It was part of his effort to make student loan debt more manageable, especially for low-income borrowers. It replaced the REPAYE program.
The SAVE Plan was the most affordable repayment plan for federal student loans ever created, according to the DOE. If you were single and made less than $32,800 a year, you didn’t have to make any payments at all. (If you were part of a family of four and made less than $67,500 annually, you also didn’t have to make payments.)
For federal borrowers who were required to make payments and had only undergraduate school loans, the monthly payments could be cut in half and go to as low as 10% of discretionary income. The plan was for payments on undergraduate debt to be further lowered to 5% of income beginning in the summer of 2024. Because of the court challenge, that never happened.
For federal borrowers who had graduate school loans, their monthly payments could be 10% of their discretionary income. Also, under the SAVE Plan, those who originally took out $12,000 or less in loans were eligible for forgiveness after at least 10 years of monthly payments.
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Why SAVE Was Put on Hold
In June 2024, judges in Kansas and Missouri issued injunctions against the SAVE plan, arguing that the administration didn’t have the authority to forgive student debt on the scale the SAVE plan allows. Such widespread loan forgiveness could only be authorized by Congress, the lawsuits said.
At first, the injunctions halted only the part of the SAVE plan that lowered the minimum amount owed to 5% of discretionary income for qualifying borrowers. The injunction from Missouri also paused debt forgiveness for SAVE enrollees.
However, in August 2024, the 8th Circuit Court of Appeals went further and officially blocked President Biden’s administration from moving forward with lowering monthly payments and forgiving debt for long-term borrowers under SAVE.
A period of limbo for SAVE is underway. The DOE released guidance in October 2024 saying, “Borrowers in SAVE and anyone who has applied for SAVE should expect to remain in interest-free general forbearance for six more months or longer, pending further developments from the 8th Circuit Court of Appeals.” This would end the limbo in April 2025 at the earliest.
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Do You Still Make Payments Under Your SAVE Plan?
No, if you are one of the 8 million people enrolled in SAVE, your monthly payment is in forbearance.
While in forbearance, you do not have to make monthly payments on your student loans. Interest will not accrue during this time. Borrowers, and employers on borrowers’ behalf, can make payments during the forbearance, but those payments will be applied to future bills due after the forbearance ends.
The problem with halting payments for months is that some people are trying to reach a minimum number of payments so that their student loan debt would be entirely forgiven under a program like Public Service Loan Forgiveness (PSLF). You must make 120 months’ worth of payments to qualify for PSLF loan wipeout.
According to the Federal Student Aid website, “Time spent in this general forbearance will not count for PSLF or IDR forgiveness.” The FSA also says that for those who want to keep making payments, “Borrowers can apply to enroll in a different PSLF-eligible repayment plan. We encourage borrowers to look at the specific terms of each plan to make the best choice for their individual situation.”
Other Loan Repayment Programs
Borrowers may still apply for income-driven federal loan repayment plans or loan consolidation by using the online applications linked below:
• Income-Driven Repayment (IDR) Plan Application
• Loan Consolidation Application
Within income-driven repayment, the options are SAVE or Income-Based Repayment (IBR).
“The terms of the SAVE Plan and other IDR plans are subject to the outcome of ongoing litigation,” according to the FSA website.
Borrowers should note that, under the court’s injunction, no new enrollments are being accepted for the Pay As Your Earn (PAYE) or Income-Contingent Repayment (ICR) Plans, with one exception: Borrowers with a consolidation loan that repaid a parent PLUS loan can continue to enroll in the ICR Plan (but not the PAYE Plan).
The Takeaway
The Saving on a Valuable Education (SAVE) program was put on hold in the summer of 2024 because of court challenges to President Biden’s loan forgiveness plan. The 8 million people enrolled in SAVE are currently in forbearance. This period of limbo is expected to last until at least April 2025. This article will be updated as the DOE releases more information about SAVE. To find more details yourself, this StudentAid page is a good place to start.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
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SoFi Student Loan Refinance
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