The End of the SAVE Program: What It Means for Student Loan Borrowers

A New Era for Student Loan Forgiveness in Jeopardy

The SAVE (Saving for a Valuable Education) program, introduced by the Biden administration in 2023, was designed to provide millions of student loan borrowers with lower monthly payments and a shorter path to loan forgiveness. However, the program has hit a major roadblock after a U.S. appeals court ruled that the administration overstepped its authority in creating the plan. The 8th Circuit Court of Appeals determined that the Department of Education exceeded its powers by structuring SAVE primarily as a forgiveness program rather than one focused on repayment. This decision has left borrowers in limbo, with limited options for alternative payment plans and growing uncertainty about the future of student loan relief.

The Implications of the Court’s Ruling

The SAVE program was initially launched as part of an executive order by President Joe Biden, offering borrowers reduced monthly payments and multiple pathways to forgiveness. However, the program faced immediate backlash from Republican-led states, which argued that the Department of Education had no authority to modify repayment terms without congressional approval. In 2024, a federal court issued an injunction blocking the Department of Education from using the SAVE plan to forgive loans under its terms, effectively halting the program. Now, with the Department of Education potentially facing dissolution, borrowers are left with more questions than answers about their financial futures.

What’s Next for Borrowers Enrolled in SAVE?

For those currently enrolled in the SAVE program, the situation remains unclear. It is uncertain whether borrowers will be automatically transferred to a standard repayment plan or if other income-driven repayment (IDR) plans will reopen. Experts suggest that borrowers may have a narrow window—likely 90 days or less—to transition to a different plan once the SAVE program is officially dismantled. While the legal challenges unfold, borrowers are advised to stay proactive and maintain communication with their loan servicers. Ken Ruggiero, CEO of Ascent Funding, emphasizes the importance of staying informed and ensuring payments continue uninterrupted during this uncertain period.

Alternative Options for Borrowers Seeking Relief

Although the SAVE program is no longer viable, other income-driven repayment plans, such as Income-Based Repayment (IBR) and Pay As You Earn (PAYE), may still provide relief for some borrowers. However, these plans come with stricter eligibility criteria and higher monthly payments compared to SAVE. Borrowers are encouraged to explore these options and use tools like the StudentAid.gov loan simulator to compare different repayment plans and estimate their potential monthly payments. For those enrolled in the Public Service Loan Forgiveness (PSLF) program, the PSLF Buyback program offers a chance to make up skipped payments during forbearance, potentially accelerating their path to forgiveness.

The Potential Dissolution of the Department of Education

One of the most pressing concerns for borrowers is the potential elimination of the U.S. Department of Education. If the department is dismantled, the management of federal student loans is likely to be transferred to another agency, such as the Treasury Department. Elaine Rubin, a student loan policy expert, notes that borrowers should expect their loan terms to remain unchanged if such a transfer occurs. While the Department of Education has closed applications for all IDR plans, borrowers are urged to monitor updates from their loan servicers and the official StudentAid.gov website for guidance.

What Borrowers Should Do Next

For borrowers worried about their student loans, staying informed and proactive is crucial. Experts recommend keeping a close eye on communications from the Department of Education and loan servicers, as the situation continues to evolve. While payments are likely to remain paused until December, borrowers should prepare for the possibility of resuming payments under a different plan. Those enrolled in SAVE should explore alternative repayment options and consider reaching out to financial advisors for personalized guidance. As the legal and political landscape continues to shift, staying engaged and adaptable will be key for navigating this challenging time.