The SAVE (Saving on a Valuable Education) plan, introduced by the Biden administration, has faced a rocky path since its inception. Designed to provide relief to federal student loan borrowers, the plan has become the center of intense legal battles, with its future now in the hands of the Supreme Court. As these court cases unfold, borrowers are left in a state of confusion and uncertainty. In this blog, we’ll explore the history of the SAVE plan, its journey through the courts, and most importantly, what borrowers should do during this unpredictable time.
History of the SAVE Plan and Lawsuits
The SAVE plan was launched as an income-driven repayment plan aimed at easing the burden of student loans for millions of Americans. It promised to lower monthly payments, expedite debt forgiveness, and allow more borrowers to qualify for $0 monthly payments. However, the plan quickly became a target of legal challenges.
Two major lawsuits, Alaska v. Department of Education and Missouri v. Department of Education, were filed by GOP-led states. These lawsuits argue that the SAVE plan imposes an unlawful financial burden on states. While some courts initially blocked portions of the plan, appellate courts have since allowed it to proceed. The fate of the SAVE plan now rests with the Supreme Court, which is considering whether to allow the plan to continue or to halt it entirely while litigation is pending.
What Borrowers Should Do (or Not Do) During This Time
With the future of the SAVE plan in limbo, borrowers are understandably anxious about what steps to take. The Department of Education has placed loans in forbearance, meaning payments are paused, and no interest will accrue during this time. However, this forbearance period does not count toward loan forgiveness under income-driven repayment plans or Public Service Loan Forgiveness (PSLF).
Borrowers who have received a bill for upcoming payments should know that payment is not required during this period. Those who have not yet received a bill will not receive one until the court dispute is resolved. It’s crucial for borrowers to stay informed by regularly checking for updates from the Department of Education.
What Is Forbearance?
Forbearance is a temporary pause on loan payments, during which no interest accrues and payments are not required. While this can provide short-term relief, it’s important to understand that time spent in forbearance does not contribute to the progress toward loan forgiveness under income-driven repayment plans or PSLF. For borrowers aiming to achieve loan forgiveness, it’s essential to consider the long-term implications of forbearance.
Key Takeaway
The future of the SAVE plan remains uncertain as the legal battles continue to play out. While the outcome is unclear, it is crucial for borrowers to stay informed and seek professional guidance. Kaplan Law is here to help you navigate these challenging times and make informed decisions about your student loans. Contact us today to find out more.
