Student loan borrowers tangled in the legal disputes surrounding the Saving for a Valuable Education (SAVE) plan should expect more stability starting in December. Numerous lawsuits have caused a delay in the Department of Education's SAVE plan, causing the department to reintroduce two previous repayment plans for worried borrowers. Borrowers are allowed to remain on the SAVE plan and in forbearance while awaiting the resolution of these cases. From December 15, borrowers keen to resume their payments can start applying for the two revived income-centered plans.
Earlier, the Department of Education had put a halt to all applications for the Income-Contingent Repayment (ICR) plan and Pay As You Earn (PAYE) on July 1, 2024, presenting the more generous SAVE plan as a new repayment program for borrowers. Post July, the only repayment schemes borrowers could sign up for were the Income-Driven Repayment (IDR) plan and SAVE. Unfortunately, borrowers were introduced to a whole new challenge when the Eighth Circuit Court of Appeals sided with Republican-led states disputing the legality of the SAVE plan, ordering the federal government to halt the program temporarily.
As a result, various legal challenges have left borrowers in uncertainty. The Department of Education has placed all SAVE plan borrowers into forbearance until lawsuits find closure. Consequently, millions of borrowers are off the hook for payments and will not accrue interest on their loans until further notice.
With the SAVE plan borrowers unable to make payments, some are hindered from achieving loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. Applications for PAYE and ICR are expected to end once more on July 1, 2027. This would buy the Department of Education enough time to "construct a version of the SAVE plan that aligns with the Eighth Circuit’s injunction pending appeal," according to a department statement.