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Why the SAVE project was shelved
The SAVE program has been the source of controversy since the Biden administration launched the program in the summer of 2023, describing it as “the most affordable student loan program ever.”
In fact, the terms of the new income-driven repayment plan are the most generous yet.
SAVE comes with two key provisions that are subject to legal challenge: It has lower monthly payments than any other federal student loan repayment plan, and For those with smaller balances, it can eliminate debt faster.
Republican-led states suing the U.S. Department of Education over SAVE argue that the agency exceeded its authority and was essentially trying to find a roundabout way to forgive student debt after the Supreme Court. blocked Its comprehensive plan will be announced in June 2023.
Before the legal challenge, the Department of Education had forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE program.
Experts say those already receiving relief will not be affected by the pause in the program.
No payment yet
no credit can be forgiven
Unlike other student loan payment pause periods, the months during this period do not count toward a borrower’s loan forgiveness timeline.
This means those who join SAVE and hope to eventually clear their debt under the terms of an income-driven repayment plan or the terms of a Public Service Loan Forgiveness didn’t get They don’t pay the credit for the period.
However, borrowers seeking student loan relief should still explore their options, he said Elaine Rubinis the director of corporate communications for Edvisors, a company that helps students navigate college costs and debt.
For example, the Ministry of Education provides the so-called repurchase Options for PSLF borrowers who may miss a payment. The opportunity allows borrowers close to debt relief to access credit from previous months through retroactive payments, Rubin said.
Alternatively, borrowers who don’t want to lose their credit during the months spent in this forbearance might consider switching to another Income driven repayment planRubin said.
“However, transitioning between repayment plans can take several months,” she said. “Some borrowers reported that their servicers told them this could take up to 90 days.”
Additionally, Kantrowitz noted that SAVE participants can benefit from $0 monthly payments even if they are not moving toward debt relief for the time being.
“Borrowers have nothing to lose from the moratorium except time,” he added.
