The SAVE lawsuit is a legal challenge to the Saving on a Valuable Education (SAVE) plan, a federal program that allows borrowers to repay their student loans based on their income.
As of 10/15/24 the SAVE repayment plan, the newest and most forgiving of the federal income driven repayment options, has been blocked by two lawsuits claiming that the Biden administration lacked the authority to cancel student loan debt. Until those lawsuits are resolved, federal student loan borrowers who were already enrolled in the SAVE plan have been placed in a no-interest forbearance.
What does this mean for borrowers?
- No payments due during the forbearance.
- No interest accrual while forbearance is in effect.
- Time in forbearance won’t count toward student loan forgiveness under IDR plans or Public Service Loan Forgiveness (PSLF).
The U.S. Dept. of Education has advised that borrowers can choose a different income driven repayment plan in order for their payment count to continue toward the 120-payment requirement for PSLF, but this has led to incredible frustration. The DOE’s online IDR application at www.studentaid.gov is back in service, and we’ve heard federal loan services are processing paper applications however we’ve been unable to confirm this.
What is a borrower to do regarding PSFL?
- If you’re on track to reach the 120-payment finish line but are blocked by the current forbearance period from adding to your qualifying payment total, you can choose to remain in the forbearance until the court has ruled on the legality of the SAVE plan, and then choose the “Buy Back” option. The buyback option is only available if you already have 120 months of qualifying employment and buying back months in forbearance or deferment (excluding in-school deferments) would result in forgiveness under PSLF. You’ll need to pay what you would have paid on a different IDR plan (i.e., not the SAVE plan) during the months you’re buying back, which means factoring in your income level and family size during the months in question. You can buy back months all the way back to October 2007, provided that you had qualifying employment at that time.
- If you’re nowhere near 120 payments yet, you could also use the current forbearance period to set aside money to make payments whenever they resume.
Fresh Start and On Ramp programs end
As of 10/2/24, both the Fresh Start and the On Ramp programs have come to an end. The Fresh Start program gave borrowers an easier path to get out of default, and the On Ramp program protected borrowers from the adverse impacts of missed payments during the last 12 months and prevented borrowers from going into default. With the end of both programs, borrowers will be vulnerable to collection activity and possible garnishment. Those borrowers looking to get out of default must once again choose between federal student loan rehabilitation, consolidation, or paying off all delinquent charges. If you do not know who is collecting on your federal student loans you should contact:
Default Resolution Group
Phone: 1-800-621-3115
Monday-Friday: 8 a.m.–10 p.m. Eastern time
Saturday: 8 a.m.-6 p.m. Eastern time
Mail: Default Resolution Group
P.O. Box 5609
Greenville, TX 75403-5609
What’s next?
Stay tuned for the outcome of the federal court hearing about the future of the SAVE and other income-driven plans on October 24.
PSLF has never been easy, or understandable. Today is no different. That’s why MTA Benefits partners with Cambridge Credit Counseling (CCC) to provide members with free advice on how to manage their debt in general. CCC is a non-profit organization based in Mass. that has helped thousands of MTA members manage and emerge from the burden of student loan debt. Contact them today at 800.757.1788.