Earlier this week, the U.S. Supreme Court delivered a significant blow to the Biden administration’s efforts to provide relief to student loan borrowers by denying their emergency request to reinstate the SAVE plan.
The SAVE plan is an income-driven repayment option that would reduce most borrowers’ monthly payments by half and shorten the time required for loan forgiveness.
Originally set to be fully implemented by July, the SAVE plan has been caught up in legal challenges that have delayed its rollout.
Legal Challenges Continue for SAVE
The SAVE plan faced opposition from GOP-led states, who filed lawsuits arguing that the Biden administration lacked the legal authority to reduce payments and offer forgiveness.
Consequently, the 8th Circuit U.S. Court of Appeals blocked the SAVE plan before it could recalculate borrowers’ payments.
The Biden administration then sought an emergency reinstatement from the Supreme Court, but that request was denied. The Supreme Court has sent the case back to the appellate court for further review.
SAVE Borrowers Will Remain in Forbearance While the Court Cases Play Out
For now, the 8 million borrowers enrolled in the SAVE plan are in interest-free forbearance. This means they don’t have to make payments, and interest won’t accrue on their loans. However, it’s important to note that this forbearance period does not count towards loan forgiveness.
Federal On-Ramp Period Due to End September 30th
For those not enrolled in the SAVE plan, loan payments are still due, and there’s only one month left until the federal on-ramp period ends.
The on-ramp period, which concludes on September 30th, offers temporary relief by not reporting late payments as delinquent to credit agencies.
Navigating Repayment Options
If you’re struggling to make payments and looking to enroll in an income-driven repayment plan, the situation is complex.
Loan servicers are only accepting PDF applications for income-driven plans right now, and some options like PAYE or ICR are only accepted with exceptions.
Be aware that PDF applications might face delays, potentially placing applicants into a “processing forbearance” for up to 60 days. During this time, interest will still accrue on your loans.
If the application isn’t processed within 60 days, loans will be moved into an “interest-free” forbearance, similar to current SAVE enrollees, until the 8th Circuit issues a ruling on the appeal.
Hurry Up and Wait
The legal battle over the SAVE plan isn’t over yet.
The 8th Circuit’s decision could still be challenged, and the case might eventually return to the Supreme Court. In the meantime, borrowers can continue to track their repayment status and seek guidance from repayment specialists at IonTuition.