SAVE Plan Court Actions

On July 18, 2024, a Federal Court issued a stay preventing the Department of Education from operating the Saving on a Valuable Education (SAVE)Plan. The Department of Education is currently assessing the ruling.

1. Block on Implementation

The 8th Circuit Court of Appeals has blocked the implementation of the Biden administration’s student debt relief plan, known as the SAVE plan. This plan aimed to reduce monthly payments for many student loan borrowers.

2. Republican-Led States' Challenge

The block came in response to a motion by Republican-led states that sought to invalidate the entire student loan forgiveness program. The court's order prevents the administration from implementing parts of the SAVE plan that weren't already blocked by lower court rulings.

3. What to Know

As of now, SAVE Applications are still able to get submitted and will be placed on an Interest Free Administrative Forbearance (likely to still count toward IDR months - but nothing official we have seen so far. Ultimately this is going to go all the way to the Supreme Court, which previously stated that the Dept. of Ed. had the authorization to modify existing plans, just not create a new one - which is the case.

4. PSLF Program Forgiveness

Despite the setback with the SAVE plan, on the same day as the court ruling, the Biden administration announced $1.2 billion in forgiveness for approximately 35,000 borrowers under the Public Service Loan Forgiveness (PSLF)program. This program targets public servants such as teachers, nurses, and firefighters, who qualify for debt forgiveness after making 120 qualifying monthly payments.

5. Background on PSLF

The PSLF program was established in 2007 to help public servants manage their student debt burden. Over the years, borrowers faced challenges due to strict rules and errors by loan servicers. The Biden administration has made adjustments to the program's rules and has retroactively provided credits towards required payments for many borrowers

6. Rest Assured

Currently, there are several income-driven repayment (IDR) plans available to all borrowers looking to manage their student loan payments based on their income. These IDR plans aim to make student loan repayment more manageable by adjusting payments based on income and family size, ensuring borrowers can maintain financial stability while working towards eventual loan forgiveness under certain conditions.

Summary

In summary, while the SAVE plan faces legal challenges and setbacks, the administration continues to implement targeted relief through programs like PSLF, providing substantial debt forgiveness for eligible public service workers. SAVE took what REPAYE was and enhanced it - This is likely going to be a battle over the next couple of months and will cause a lot of uncertainty with borrowers.

We understand the recent developments surrounding student loan forgiveness can be concerning. Despite legal challenges affecting certain relief plans, we want to reassure our clients and borrowers that we are fully committed to ensuring you remain in the best position to navigate these changes and pursue student loan forgiveness opportunities.

Our team is dedicated to providing guidance, support, and up-to-date information on programs that may benefit you. We are here to assist you in understanding your options, optimizing your eligibility, and navigating any complexities that may arise. Your financial well-being is our priority, and we will continue to advocate for your interests as you pursue relief from student loan debt.

About the Author

Zack Geist founded Student Loan Tutor in 2015. As one of the leading experts in federal student loan repayment he and his team have taught thousands of student loan borrowers all over the country how to save enormous amounts of money and hassle. He currently resides on the Hamakua Coast of Big Island Hawaii.

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