Student Loan Forgiveness: The SAVE Plan Status

If you are one of the millions of borrowers currently enrolled in the Saving on a Valuable Education (SAVE) plan, your repayment schedule is currently in limbo. Following a series of legal challenges from Republican-led states, federal courts have issued injunctions that block the Department of Education from operating the SAVE plan.

Here is a detailed breakdown of the current legal status, what it means for your monthly payments, and how this impacts progress toward loan forgiveness.

The Current Legal Blockade

As of late 2024, the SAVE plan is legally frozen. The primary blockage comes from a ruling by the 8th U.S. Circuit Court of Appeals. This court issued a preliminary injunction that prevents the Biden-Harris administration from implementing any aspect of the SAVE plan.

Prior to this sweeping block, a separate judge in Kansas had blocked only specific parts of the plan (specifically the reduction of payments from 10% to 5% of discretionary income). However, the 8th Circuit’s ruling went further, halting the entire program while the litigation moves through the court system.

In August 2024, the Department of Education asked the U.S. Supreme Court to intervene on an emergency basis to let the plan continue during the lawsuit. The Supreme Court declined to intervene at that stage. This means the 8th Circuit’s block remains in full effect until a final ruling is made on the merits of the case.

Why Is the Plan Being Sued?

The lawsuits, led primarily by the Attorney General of Missouri and joined by other states like Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, argue two main points:

  1. Authority: They claim the Department of Education does not have the statutory authority under the Higher Education Act to create a repayment plan this generous without explicit congressional approval.
  2. Economic Harm: The states argue the plan harms their tax revenues and harms state-affiliated loan servicers (like MOHELA) by incentivizing borrowers to consolidate loans away from them or by forgiving loans too quickly.

What This Means for Your Payments: Administrative Forbearance

If you are currently enrolled in the SAVE plan, your loan servicer (such as MOHELA, EdFinancial, Nelnet, or Aidvantage) should have placed your account into an interest-free administrative forbearance.

This is different from a standard forbearance you might request due to hardship. Here are the specific terms of this court-ordered pause:

  • Monthly Payment: $0. You are not required to make payments.
  • Interest Rate: 0%. Interest will not accrue on your balance during this specific forbearance period.
  • Auto-Debit: If you were set up on auto-pay, it should be automatically suspended. You should check your bank statements to ensure no funds are withdrawn.

This status is intended to protect borrowers so they do not fall into delinquency while the courts decide if the repayment plan they signed up for is legal.

The Critical Downside: Forgiveness Credits Paused

The most significant negative impact of this legal battle concerns forgiveness credit. Under the previous COVID-19 payment pause, months of non-payment counted toward Public Service Loan Forgiveness (PSLF) and Income-Driven Repayment (IDR) forgiveness (the 20 or 25-year timeline).

That is not the case with this current SAVE injunction forbearance.

The Department of Education has confirmed that time spent in this specific administrative forbearance does not count toward:

  • Public Service Loan Forgiveness (PSLF).
  • Income-Driven Repayment (IDR) forgiveness.

This puts borrowers in a difficult position: you save money now because you aren’t paying, but your eventual forgiveness date is being pushed back month-by-month for as long as the litigation lasts.

Can You Switch Plans?

Technically, borrowers are allowed to apply for other Income-Driven Repayment plans, such as Income-Based Repayment (IBR). However, the practical reality is complicated.

Following the court rulings, the Department of Education had to shut down its internal processing systems to reconfigure them to comply with the judge’s orders. This resulted in a massive processing backlog.

  • Online Applications: The online IDR application tool at StudentAid.gov has faced significant outages and limited functionality.
  • Paper Applications: You can submit a paper application (PDF) to your servicer to switch plans, but servicers have been instructed to pause processing these applications temporarily.

Essentially, while you have the right to switch to a different plan, the mechanism to do so is currently clogged. Many borrowers attempting to switch are simply placed in a processing forbearance (which generally includes interest accrual) until the servicers can work through the backlog.

What Should PSLF Borrowers Do?

For public servants (teachers, nurses, government employees) aiming for 120 qualifying payments, this pause is frustrating. You have two primary options:

  1. Wait it Out: Stay in the interest-free forbearance. Save the money you would have paid in a high-yield savings account. Once the litigation resolves or you can switch plans, you can use those savings.
  2. Buyback Program: The Department of Education offers a “buyback” option. If you stay in this forbearance and work for a qualifying employer, you may be able to “buy back” these months later. You would submit a request closer to your forgiveness date, pay what you would have owed for those months, and receive credit. This allows you to claim the credit without leaving the SAVE plan right now.

Summary of Impact by Servicer

Regardless of who services your loan, the rules apply federally. However, communication styles vary.

  • MOHELA: As the primary servicer for PSLF, MOHELA has sent specific notices regarding the “General Forbearance.” Check your secure inbox.
  • Aidvantage / Nelnet / EdFinancial: These servicers have updated borrower dashboards to reflect a payment due date far in the future or a $0 amount due.

Frequently Asked Questions

Is interest growing on my balance while the court decides? No. If you are enrolled in SAVE and placed in the specific administrative forbearance resulting from the 8th Circuit injunction, your interest rate is set to 0% for the duration of the pause.

Can I make payments anyway to get PSLF credit? No. The Department of Education has stated that even if you make manual payments during this specific forbearance period, they will not count toward PSLF or IDR forgiveness because the plan itself is legally blocked.

Will the SAVE plan be cancelled permanently? It is possible. If the courts ultimately rule that the Biden administration lacked the authority to create the plan, it could be struck down. If that happens, borrowers would likely be moved to a different repayment plan, such as the older Revised Pay As You Earn (REPAYE) or IBR plans.

I just applied for SAVE. What happens to my application? If you applied recently, your application is likely in a holding pattern. Servicers have paused processing new enrollments into SAVE. You may be placed in a standard processing forbearance (where interest might accrue) until the Department of Education provides further guidance to servicers.