In a statement released today by the U.S. Secretary of Education Miguel Cardona,
“Borrowers enrolled in the SAVE Plan will be placed in an interest-free forbearance” while the Biden Administration defends the SAVE Plan in court.
SAVE, or Saving on a Valuable Education, is an income-driven repayment option that offers the lowest possible monthly payments and includes a path to forgiveness in as little as 10 years.
The Education Department has already forgiven $5.5 billion in student debt for over 400,000 borrowers through the SAVE Plan.
Borrowers on the SAVE plan were due to have their payments lowered on July 1st, but a Republican-led lawsuit stopped the plan initially. The SAVE plan was allowed to move forward without the forgiveness aspect while the Department of Education appealed the lawsuit.
A federal appeals court in Missouri blocked the SAVE Plan again in a ruling on July 18th, impacting roughly 8 million student loan borrowers.
The lawsuit filed by GOP-led states argued that the Biden administration overstepped its authority.
As of today, studentaid.gov has this message on its website:
“On July 18, 2024, a Federal Court issued a stay preventing the Department from operating the Saving on a Valuable Education (SAVE) plan. We are assessing the ruling and will be in touch directly with borrowers about how this will affect them.”
https://studentaid.gov/
What does this mean for borrowers?
- Borrowers enrolled in the SAVE plan will have their payments paused (interest-free) while the legal challenges play out in court
- It is unclear when payments will resume
- Borrowers on IonTuition can continue to track their repayment through our online portal