SAVE Lawsuits: 4 Options For Borrowers Right Now

Lawsuits blocked the income-driven repayment (IDR) plan Saving on a Valuable Education (SAVE) in June 2024, leaving the 8 million federal student loan borrowers enrolled in SAVE with uncertainty.

Here are the key facts SAVE borrowers need to know, according to updated Education Department guidance from Jan. 15, 2025:

• You don’t currently owe monthly payments, and no interest is accumulating on your debt. The downside: you aren’t earning credit toward IDR forgiveness or Public Service Loan Forgiveness (PSLF) during the payment pause.

• The SAVE payment pause, known as forbearance, could last through 2025. You likely won't owe a payment until December 2025. However, the incoming Trump administration could change this timeline.

• Income recertification deadline extended until early 2026. You won’t need to recertify your income until Feb. 1, 2026, at the earliest. Your servicer will update you with an individual recertification deadline.

• Servicers recently began processing some IDR applications. You may switch to one of the other income-driven repayment plans — Pay as You Earn (PAYE), Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR). This would allow you to restart payments and earn PSLF and IDR forgiveness credit again. The online IDR application is also back up, after closing for a few months.

• Forgiveness under other IDR plans remains temporarily suspended. The department is not processing any IDR forgiveness right now. If you reach the forgiveness threshold under another IDR plan, you'll be placed in an interest-free forbearance. (Forgiveness under the IBR plan is still happening.)

The future of SAVE remains unclear. We don’t yet know if the plan will exist in the coming years, or if it will take a different form. However, Jan. 15 Education Department guidance suggests that SAVE could evolve to resemble the former Revised Pay as You Earn (REPAYE) plan. SAVE replaced REPAYE in 2023.

» MORE: PAYE and ICR repayment plans reopen

If you’re enrolled in SAVE, here are your options right now — plus what we might expect from SAVE in the future, and the key legal context to know.

Take action (or don’t): 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. Servicers are processing new applications for these three plans, as of Jan. 15.

» MORE: Choose the best student loan repayment plan

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, or if you're a low-income borrower who may qualify for $0 payments, an Education Department spokesperson said.

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.

IBR typically requires the highest monthly payments, but it’s the only plan granting IDR forgiveness at this time. If you are close to the payment threshold for IDR forgiveness (20 years if you only have undergraduate loans; 25 years if you have any graduate loans), switching to IBR could lead to imminent forgiveness.

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

» MORE: What is administrative forbearance for student loans?

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 in autumn 2023; 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, a 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 may not owe a payment until December 2025, and no interest will accrue on your debt. 

• You won’t 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. Check that you are enrolled in the right kind of forbearance.

» MORE: How to call your student loan servicer

What’s the future of SAVE?

We don’t know if the plan will exist in the future, or if it will, to what extent. The future of SAVE largely hinges on court decisions and the Education Department — and experts don’t expect the Trump administration to support SAVE.

However, an Education Department document published on Jan. 15 offers some clues about SAVE’s possible future:

“The Department is working to build a version of the SAVE plan that complies with the Eighth Circuit’s injunction. That plan would generally have the same terms as the 2015 REPAYE rule with respect to the monthly payment amounts for borrowers. At this time, the Department anticipates that such work will not be completed until at least the early fall of 2025,” the document says.

SAVE replaced REPAYE in August 2023; all borrowers enrolled in REPAYE at that time were moved into the SAVE plan. REPAYE offered the following terms:<br>

• REPAYE income exemption. 150% of the poverty line. (Your monthly payment is based on your discretionary income, calculated as the difference between your adjusted gross income and a certain percentage of the federal poverty guideline for your family size. SAVE has a 225% income exemption, which means more of your income is protected.) 

• REPAYE monthly payment cap. 10% of discretionary income. (SAVE capped payments at 5% for borrowers with undergraduate debt, and at 10% for those with any graduate debt.) 

• REPAYE repayment term. 20 or 25 years. (SAVE offered a 10-year term for borrowers with $12,000 or less in principal loans, and 20 or 25 terms for all other borrowers.) 

The document says borrowers will remain in the interest-free SAVE forbearance until the revised plan is available.

» MORE: How the Trump presidency could affect student loan borrowers

SAVE lawsuits: Key context and how we got here

The lawsuits, filed in the spring of 2024 by two groups of Republican-led states in the 8th and 10th U.S. Circuit Courts of Appeals, 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 in 2023, 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 committed to defending the SAVE plan and appealing recent lower court decisions, but the Trump administration may drop federal appeals. The Supreme Court declined to consider the cases in late August 2024, 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, 2024. The lawsuits blocked these final SAVE benefits.

Before the lawsuits blocked the plan, the Education Department had forgiven $5.5 billion in student debt for 414,000 SAVE borrowers.