The SAVE Plan Lawsuits: What We Know and How AccessLex Can Help

SAVE Plan: What We Know

In 2023, the Biden-Harris Administration created the Saving on a Valuable Education (SAVE) Plan, an income-driven repayment (IDR) plan aimed at lowering monthly payments and overall loan balances for most student loan borrowers. The SAVE Plan was implemented in stages, with some elements, such as increasing the amount of protected income, going into effect July 2023 and the rest, such as lowering monthly payments, scheduled to go into effect July 1, 2024.

However, in early 2024, two groups of states sued the administration in separate lawsuits to block the SAVE Plan, arguing that it does not have the authority to alter student loan repayment plans.

On July 18, the Eighth Circuit Court of Appeals ruled that the Education Department (ED) must stop implementing SAVE in its entirety while the case is ongoing. At that time, then-ED Secretary Miguel Cardona announced that borrowers enrolled in the SAVE Plan would be placed in an interest-free forbearance. During this general forbearance, interest will not accrue, and months spent in this forbearance will not count towards Public Service Loan Forgiveness (PSLF) or IDR forgiveness.

However, with President Donald Trump in office, we could see significant changes to federal student loan and repayment programs. It remains to be seen how the Trump Administration will approach the SAVE Plan – will it continue to defend the program in court, modify the plan, or even repeal it?

How Do Recent Updates Impact Borrowers?

Borrowers who were/are successfully enrolled in the SAVE Plan:

• Are in a general forbearance until the fall of 2025, during which time no interest is accruing and months are not counting toward PSLF and/or IDR plan-based forgiveness.
• Time in the non-interest accruing forbearance can potentially be recaptured for the purposes of PSLF using the PSLF Buyback program when the time comes.
• Recertification deadlines are subsequently pushed due to the forbearance and will resume no earlier than February 1, 2026. ED is encouraging borrowers to visit StudentAid.gov and provide consent for auto-recertification if eligible.
• Forgiveness as a feature of SAVE, Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans specifically is currently paused due to the court rulings.
• Payments made under these plans can count toward IDR forgiveness if a borrower switches to the Income-Based Repayment (IBR) Plan, when available.
• Any payments made during this forbearance through your servicer will be applied to future bills due after the forbearance ends.
• Borrowers in this forbearance can change plans by contacting their servicer but should be aware of the details and nuances associated with any plan they are moving to.
• This forbearance may be useful for borrowers seeking to wait and see what happens with the injunction, need temporary monthly cashflow relief, or who are not concerned about this time in forbearance not counting toward forgiveness associated with IDR plans after 20 to 25 years. 

Borrowers entering repayment for the first time or looking to recertify on an IDR plan:

• The online applications for IDR plan requests and the Direct Loan consolidation (paying off several federal loans with one new federal loan) are now available.
• Visit StudentAid.gov/SaveAction to review revised timelines for recertification depending on whether you were due to recertify and/or submitted a recertification form before or after March 17, 2025.
• Consolidating may or may not be necessary to achieve your repayment goals. You should schedule a free call with an Accredited Financial Counselor^® through AccessConnex by AccessLex^℠ to discuss the pros and cons of this decision before submitting the application.
• You may submit forms now, but Federal Student Aid notes that loan servicers are still updating their systems to be able to process applications, so you may still have to wait.
• Standard, fixed (or level)-payment plans, and requesting other standard forbearance or deferment options with your servicer are still available strategies.

More on Standard, Fixed-Payment Plans, and Income-Driven Repayment:

Fixed-payment plans that set payments based on total amount owed, interest rates, and repayment periods, are unchanged and available. These include the 10-year standard (default) plan, the extended plan (up to 25 years), and the graduated versions of these plans.

• Note: The only fixed-payment plan that counts payments toward the 120 monthly payments needed for PSLF is the 10-year standard (default) plan.
• These plans may be most useful for borrowers who do not benefit from IDR, have the income necessary to support fixed payments over the set term, or who are seeking to accelerate repayment with additional discretionary payments on principal.

Income-driven repayment (IDR) plans exist to help make student loan payments more affordable for borrowers by basing monthly payments on income and family size.

• Read about the four IDR plans offered by the Education Department (ED) and the details of each plan.

Saving on a Valuable Education (SAVE): Not available for enrollment by new applicants as it does not appear on the updated IDR Plan Request Form.

The Pay as you Earn (PAYE) and Income-Contingent Repayment (ICR) Plans are available via the updated online application, but features of these plans, such as 20- or 25-year forgiveness and any interest subsidies, are enjoined with the court actions on SAVE and are therefore also paused. These plans, along with the Income-Based Repayment (IBR) Plan, are still eligible for Public Service Loan Forgiveness (PSLF).

Income-Based Repayment (IBR): The Income-Based Repayment (IBR) Plan, which was separately enacted by Congress, is the only IDR plan that is currently processing forgiveness for borrowers who have been in repayment for the maximum term (20 to 25 years depending on the year of the earliest loan borrowed).

• If a borrower enrolls in an IBR Plan and then moves to a different repayment plan, accrued and unpaid interest will capitalize (be added to the principal balance).
• This plan may be useful for borrowers seeking lower payments via IDR, while also continuing their payment count toward PSLF and/or IDR forgiveness without having to wait to see what results from the SAVE injunction.

Action Items for All Borrowers

To discuss your options and considerations impacting your repayment decisions, schedule a call with an Accredited Financial Counselor via AccessConnex coaching (more information on this free service is below).

With so much of the loan repayment landscape in flux, it’s easy for borrowers to be overwhelmed. Borrowers can take this time to focus on things they can control, like:

• Reading this article on the subject on what to do while we prepare for change;
• Logging into all loan portals and verifying accurate contact information;
• Taking screenshots of loan balances and loan details and saving them in a file for reference as needed;
• Documenting conversations with loan servicers and any other account representatives;
• Learning more about existing repayment options and options to pivot should the need arise;
• Working with financial aid offices to ensure proper and accurate aid benefits and distributions for current programs;
• Checking back frequently with official sources of information, like StudentAid.gov and ED.gov, for updates; and
• Reaching out to AccessLex Institute^® for help when needed.

How Can AccessLex Institute Help?

AccessConnex is a free, unlimited financial coaching service connecting callers with our team of Accredited Financial Counselors. Through AccessConnex, you can schedule 30-minute sessions to discuss your overall student loan repayment strategy, current options based on prevailing changes to the system, and any other money questions you may have.

To prepare for your call, gather any important information that may be relevant to your questions (e.g., student loan types, balances, interest rates, current repayment plan, etc.). Your coach will call you at the scheduled time and will ask questions to learn more about your situation and discuss options you may want to consider. Coaching with an objective, friendly Accredited Financial Counselor can provide you with a greater sense of control and clarity about potential next steps.

Schedule a free AccessConnex call now.

Information received through AccessConnex is not intended as tax, legal, or investment advice. You should consider whether it is appropriate for your needs, and where applicable, seek advice from a professional counselor.