SAVE Plan Decision Blocks Forgiveness, IDR Access

The 8th Circuit U.S. Court of Appeals issued a ruling February 18 blocking the Saving on A Valuable Education (SAVE) plan. While the case now returns to the Eastern Missouri lower district court, this ruling likely marks the end of Biden’s most affordable student loan program. SAVE enrollees should begin searching for a new repayment option. The court also ordered the end of forgiveness under Income-Contingent Repayment (ICR) and Pay As You Earn (PAYE). The recent ruling sets many federal student loan borrowers up for higher monthly payments under a new plan.

However, borrowers cannot currently switch to a different income-driven repayment (IDR) plan through the Federal Student Aid site. In response to the court ruling, the Department of Education (ED) quietly removed online and paper applications from the site last week. In addition, the department has ordered student loan servicers to stop accepting and processing applications for IDR plans for at least three months.

What this means for borrowers

All federal student loan borrowers, no matter your plan, should continue watching for news on student loans. The best sources for updates include your servicer, StudentAid.gov, reliable news outlets and industry experts. As student loan cancellation misinformation on TikTok demonstrates, social media may not always have correct information.

If you’re enrolled in one of the Department of Education’s four income-driven repayment plans, your next steps will depend on the plan you’re in and your financial goals. Keep in mind that the only plans currently available for enrollment are Standard, Graduated and Extended plans — none of which offer forgiveness.

If you’re enrolled in SAVE

At the time of writing, the SAVE plan forbearance is still in effect. During forbearance, you are not required to make payments and interest does not accrue. While you’re in forbearance, you should start preparing for higher payments (potentially double your current payment) once you switch plans, which you’ll be required to do if the SAVE Plan is dismantled.

If you wish to receive loan forgiveness after 20-25 years, switch to the Income-Based Repayment (IBR) plan once its application is reopened. This is the only IDR plan still offering forgiveness at the end of your repayment term.

“Payments made in the SAVE repayment plan likely count toward forgiveness under IBR,” says leading student loan expert Mark Kantrowitz. “But there will be no new forgiveness directly under the SAVE repayment plan.”

If you’re enrolled in ICR or PAYE

Forgiveness under ICR and PAYE is paused. According to the ED, those who reach their 20- or 25-year milestone under their plan will now be put into an interest-free forbearance.

Since the IBR plan still offers forgiveness, those in ICR or PAYE should switch to the IBR program when they are able to apply. Payments made while enrolled in ICR or PAYE will count toward IBR plan forgiveness.

If you need to recertify

Since IDR payment plans are based on income, enrollees must recertify their income each year or face consequences — which could include removal from the program. With applications unavailable, you are not able to recertify even if your due date is approaching.

According to the SAVE plan court actions page, since SAVE forbearance is expected to last until fall 2025, the ED has instructed loan servicers to extend IDR recertification deadlines to no earlier than February 1, 2026.

Despite this, some borrowers on Reddit report their servicers threatening to place them on the standard repayment plan if they don’t recertify. You can check your deadline by logging into your account on your servicer’s website or StudentAid.gov. If your deadline is approaching and you haven’t heard from your servicer, reach out to get information and remind your servicer about the deadline extension.

Borrowers can also provide consent for automatic recertification through StudentAid.gov. As you wait for new recertification deadlines, you should continue making your payments.

If you’re working toward PSLF

“Because borrowers who were in the SAVE repayment plan are unable to switch into another income-driven repayment plan, they are unable to make additional qualifying payments that count toward Public Service Loan Forgiveness,” says Kantrowtiz.

Though time spent in the SAVE forbearance will not count toward PSLF, you can still receive forgiveness once you reach 120 qualified payments — as long as you switch to IBR when possible, according to Kantrowitz.

If you’re currently in forbearance, you may also have the option to “buy back” certain months of your payment history so they count toward PSLF.

If you can’t afford your new payment

If you end up on the IBR plan or one of the variations of the Standard plan, your monthly payment will likely increase. To prepare, start seeing where you can adjust your budget. If you’re currently in forbearance, stockpile some or all of the money that would be going toward your payment, if you can afford to do so. That way, when repayment starts back up, you’ll have a cushion. Use a student loan calculator to play around with numbers and see what other plan may work best for you.

If you’re worried you won’t be able to make the new payment, or are struggling with payments now, reach out to your servicer to learn what options you may have. You can also consult a student loan advocate in your state to learn more. You may also consider refinancing to a private student loan if it means a significantly lower interest rate or a payment you can afford.

Stay updated and prepare for changes now

According to Kantrowitz, the application pause comes as the department makes necessary changes to repayment plans. He points out that a similar thing happened during Biden’s administration. Right now, it’s a waiting game to see whether the Trump administration ends or overhauls these payment plans.

“It will take some time for the lower court to issue its ruling based on the appeals court decision, then it will take some time for the U.S. Department of Education to implement the decision,” he says.

The best thing you can do right now to protect your finances is to stay up-to-date on student loan news, reach out to your servicer with questions and plan for the future now. That includes researching your other repayment plan options, creating a financial plan for higher payments and accepting that loan forgiveness may not come at the end of your repayment term. While that may all sound grim, you still have the power to set yourself up for success with your student loans.