How the SAVE Lawsuits Impact Borrowers: Forbearance Extended Through April

As two lawsuits block the income-driven repayment (IDR) plan Saving on a Valuable Education (SAVE), millions of federal student loan borrowers face uncertainty.

SAVE borrowers do not owe monthly payments, and no interest is accumulating on their debt. Additionally, these borrowers are not earning credit toward IDR forgiveness or Public Service Loan Forgiveness (PSLF) during the payment pause.

Here are the key facts borrowers need to know about the SAVE lawsuits, as of Oct. 22, according to an Education Department spokesperson:

• The payment pause, known as forbearance, is extended for at least six more months. If you're already enrolled in SAVE, or you've applied for the plan, you won't owe a payment until April 2025, at the earliest. The forbearance began in late June.

• Forgiveness under other IDR plans — not just SAVE — is currently on hold, as a result of the lawsuits. That includes the PAYE and Income-Contingent Repayment (ICR) plans. If you reach the forgiveness threshold under these other plans, you'll be placed in an interest-free forbearance. (Forgiveness under the Income-Based Repayment (IBR) plan is not affected.)

• Servicers will begin processing some IDR applications again soon. This will impact borrowers applying for the PAYE, ICR and IBR plans. The online IDR application is also back up, after it closed for a few months.

Meanwhile, the Biden-Harris administration says it is "vigorously" defending the SAVE plan in court. Here's what else the administration is working on, according to an Education Department spokesperson:

• The Education Department is working with student loan servicers and contractors to update their SAVE systems according to current legal guidance.

• The department plans to reopen the PAYE and ICR plans to new enrollees this fall. This will allow more borrowers to start working toward IDR forgiveness and PSLF again. (Forgiveness under IBR has been unaffected.)

• The department will improve the PSLF Buyback process.

The upcoming presidential election could impact this SAVE guidance and timeline, experts say. If Vice President Harris is elected, she would likely continue defending the plan in court. Former president Trump is likely to support the dissolution of SAVE.

» MORE: Harris v. Trump on student loans

If you’re enrolled in SAVE, here are the key forbearance details, action items and legal context to know.

Key details: Interest-free forbearance, no PSLF or IDR forgiveness credit

Of the 8 million federal student loan borrowers enrolled in SAVE, about 4.6 million owe $0 payments based on their income.

If you’re among the 3.4 million SAVE borrowers who do owe monthly payments, you’re off the hook for now. The Education Department has put all SAVE borrowers into an administrative forbearance through at least April 2025, as it continues to defend the SAVE plan in court. Upcoming payments won’t be due, even if you receive a bill.

During the indefinite forbearance, borrowers will not earn credit toward IDR loan forgiveness or PSLF, according to Education Department guidance. This is a departure from previous administrative forbearances, during which borrowers did receive this credit.

» MORE: How to get income-driven repayment loan forgiveness

In the meantime, "borrowers should make sure they are enrolled in the right kind of forbearance if they're in limbo because of these decisions," says Mike Pierce, the executive director of the Student Borrower Protection Center. "We've heard that MOHELA and other servicers may be improperly charging borrowers interest during this time, even though they have been instructed to waive interest charges for borrowers enrolled in SAVE."

Take action: 4 options for SAVE borrowers during the lawsuits

SAVE borrowers have limited options right now. Timelines are in limbo, and government guidance is subject to change as courts release new decisions.

If you’re enrolled in SAVE or otherwise affected by the lawsuits, you may consider the following four actions:

1. Switch to a different repayment plan

You can earn credit toward forgiveness during this time by switching to an IDR plan other than SAVE. Your options are IBR, ICR or PAYE.

» MORE: Choose the best student loan repayment plan

The IBR plan is the only income-driven plan open for new enrollment as of Oct. 22, and it's the only plan currently allowing borrowers to earn forgiveness credit.

However, the Education Department says servicers will begin processing applications for PAYE and ICR later this fall, which will allow borrowers to earn forgiveness credit on those plans.

Consider enrolling in PAYE or ICR if you would prefer to make payments during this time period while earning forgiveness credit. Either plan can be a good option if you're pursuing PSLF, if you're close to your IDR repayment milestone or if you're a low-income borrower who may qualify for $0 payments, an Education Department spokesperson said.

PAYE is the fastest path for borrowers seeking PSLF to keep working toward forgiveness.

Here’s what you can expect if you apply for an IDR plan right now:

• Your servicer may place you in a short-term “processing” forbearance for up to 60 days while it prepares to process your application. During this time, you won’t owe payments, but interest will accrue on your debt. You’ll continue to make progress toward PSLF or IDR forgiveness. 

• If your application is not processed within 60 days, your servicer will move you to “general” forbearance. You won’t owe payments and interest will not accrue. However, you also will not earn credit toward PSLF or IDR forgiveness while in this specific forbearance.

Use the Education Department's loan simulator to estimate what your payments might look like on different IDR plans.

2. “Buyback” forgiveness credit, if you’re eligible for PSLF

Some PSLF borrowers can "buy back" months of PSLF credit for time spent in this lawsuit-related forbearance. You may qualify for the PSLF buyback if each of these apply:

• You have an outstanding federal student loan balance. 

• You have approved qualifying employment for these months spent in the forbearance.

• Buying back these months will complete your total of 120 qualifying PSLF payments needed for forgiveness.

» MORE: What is the PSLF Buyback?

To get credit, you must submit a buyback request and make an extra payment of at least what you would have owed under an IDR plan during the month(s) you want to buy back.

This buyback process debuted last fall; more information is available on studentaid.gov.

3. Make payments anyway

Interest won’t accrue during the SAVE forbearance, so if you have the means to make payments during this time, you may be able to pay off your debt more quickly by making optional lump-sum or monthly payments toward your principal loan amount. You don't need to switch plans to do this.

"If you're someone who's on an IDR plan strictly because of your income, not because of a forgiveness opportunity, make payments," says Kristen Ahlenius, director of education and advice at Your Money Line, an workplace financial wellness company.

If the courts strike down SAVE permanently, your future monthly payments will likely be larger than they were under SAVE. Making optional payments now could limit the size of that payment increase.

"If you can reduce your balance over the next six months of forbearance, especially if you've already been doing that, that's just going to help make it easier to bridge the gap between what your payment was, or what you thought your payment would be, and what your new payment would be like," Ahlenius says.

4. Do nothing and wait it out

The process of changing repayment plans is slow and uncertain, and the buyback is only available to qualifying PSLF borrowers.

Given the chaos surrounding the federal student loan system right now, you may consider sitting out until the government updates guidance. If you are already enrolled in the SAVE plan and you do nothing, here’s what you can expect:

• You won’t owe payments until at least April, and no interest will accrue on your debt. 

• You might not earn credit toward IDR or PSLF forgiveness for this time. 

• The future of SAVE remains uncertain. If the courts strike down the plan permanently, you might wind up on a different repayment plan. 

Even if you choose to do nothing, call your servicer to make sure you understand your situation and paths forward.

» MORE: How to call your student loan servicer

SAVE lawsuits: Key context and timeline

The lawsuits, filed last spring by two groups of Republican-led states, allege that President Joe Biden does not have the authority to cancel student debt under the SAVE plan without congressional approval.

The White House opened SAVE to borrowers a year ago, using a statutory authority that has been used three times previously. Since the 1990s, every presidential administration has used that authority to create or continue to offer repayment plans that included certain common elements such as forgiveness after 20 or 25 years of payments, an Education Department official said.

The Biden administration has committed to defending the SAVE plan and appealing recent lower court decisions. The Supreme Court declined to consider the cases in late August, but could still weigh in on SAVE in the future.

Nonetheless, the future of SAVE remains unclear. The current blockage is temporary, pending further legal decisions. Federal judges and even the Supreme Court may decide the fate of the plan.

If the courts permanently strike down SAVE, millions of borrowers could lose a path to affordable student loan repayment. SAVE is more generous than other IDR plans. For example, SAVE offers lower monthly payments and an interest subsidy that prevents ballooning balances. It also forgives debt in as little as 10 years for those with principal balances up to $12,000, compared to forgiveness in 20 or 25 years on other IDR plans.

Portions of SAVE debuted to borrowers in September 2023. The final benefits of the plan — like capping payments on undergraduate loans at 5% of discretionary income, rather than 10% — were slated to roll out July 1. The lawsuits blocked these final SAVE benefits.

Before the lawsuits, the Education Department forgave $5.5 billion in student debt for 414,000 SAVE borrowers.

» MORE: 10+ programs that forgive student loans

Here’s a general timeline of the SAVE lawsuits: