What's Next For The SAVE Plan? What Student Loan Borrowers Need To Know

KEY TAKEAWAYS

• The lawsuit blocking the Saving on a Valuable Education plan has been dismissed.
• However, borrowers on the SAVE plan remain in administrative forbearance, with no clear timeline for changes.
• The only thing borrowers can be certain of is that the SAVE plan will be phased out by July 2028. They may want to move into another repayment plan to make progress toward forgiveness.

A recent court decision has put borrowers in the Saving on a Valuable Education repayment plan back into limbo.

The income-driven repayment plan was originally created under the Biden administration to provide borrowers with lower monthly payments and a quicker path to forgiveness. However, several lawsuits challenged the legality of the repayment plan and enrolled borrowers have been in administrative forbearance for more than a year and a half as the court cases unfolded.

The 7.43 million borrowers currently on the SAVE plan saw a major change Friday morning when a district judge dismissed the main lawsuit and the injunctions that blocked its implementation. While this decision means the Department of Education could lift the forbearance and resume payments under SAVE, that doesn’t mean it will.

Why This Matters

Income-driven repayment plans are essential for borrowers struggling to afford both their everyday expenses and their student loan payments. Knowing the status of their repayment plan helps borrowers plan out their budget to ensure they do not fall behind on their payments.

What’s Next?

In general, the Department of Education under the Trump administration has not been supportive of the Biden-era repayment plan. That means it is unlikely to lift the forbearance any time soon.

“I would imagine everyone will still just be an administrative forbearance,” said Megan Walter, a senior policy analyst at the National Association of Student Financial Aid Administrators. “I would think it’ll kind of remain status quo.”

Under forbearance, SAVE borrowers are not required to make a payment. However, any payments made during forbearance do not bring borrowers closer to time-based forgiveness.

The Education Department has yet to announce its plans for the SAVE plan or respond to questions about its next steps since the district judge’s decision.

“The Department of Education needs to give more clarity, both to borrowers and to the servicers, so that both parties know and understand. If they make payments while they’re currently enrolled in SAVE… are those payments going to count toward income-driven repayment loan forgiveness?” said Rae Kaplan, a student loan and bankruptcy lawyer and owner of Kaplan Law Firm. “I know a lot of borrowers have basically had whiplash trying to figure out what payment plans are legal and not legal.”

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The next step for the Department of Education could be a negotiated rulemaking process to eliminate the SAVE plan, Walter said. Most student loan changes must go through the Education Department’s negotiated rulemaking process, which involves drafting the language of a new law through a committee before putting it out for public comment. This process can typically take several months to a year.

No matter what happens in the next few years, the SAVE plan will be phased out by July 2028 by President Donald Trump’s “One Big, Beautiful Bill.” After this date, the only income-driven repayment plans available for borrowers will be the newly created Repayment Assistance Plan and the already existing Income-Based Repayment plan.

Borrowers on the SAVE plan can transfer to the RAP plan starting in July, but can request entry into the IBR plan now. Although borrowers requesting a move to the IBR plan may face significant delays. As of January, there were more than 600,000 pending applications from borrowers requesting to move to income-driven repayment plans.

“For right now, [borrowers should] check studentaid.gov and make sure that they know who their federal loan servicer is,” Kaplan said. “Properly enroll in the IBR plan, which is, for most people, the best bet, especially since they removed the income cap… In my view, the SAVE plan is just too unstable. It’s headed out the door. It’s just a question of when.”

Important

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