Student loan borrowers caught up in the legal disputes over the Saving for a Valuable Education (SAVE) plan could have more stability starting in December.

Ongoing lawsuits have frozen the Department of Education's SAVE plan, forcing the department to reopen two older repayment plans for borrowers. Borrowers can remain on the SAVE plan and in forbearance until lawsuits are resolved. Borrowers who want to restart their payments can begin the application process for two reinstated income-driven plans on Dec. 15.

How Did We Get Here?

The Department of Education closed all applications for the Income-Contingent Repayment (ICR) plan and Pay As You Earn (PAYE) on July 1, 2024, as the Saving for a Valuable Education (SAVE) plan was introduced as a more generous repayment program for borrowers.

After July 1, the only income-driven repayment plans that borrowers could apply to were the Income-Driven Repayment (IDR) plan and SAVE. However, borrowers were thrown into uncertainty later that month when the Eighth Circuit Court of Appeals sided with Republican-led states that challenged the legality of the SAVE plan and ordered the government to pause the program. 

Since then, a myriad of legal challenges have put borrowers in limbo. The Department of Education has put all SAVE plan borrowers in forbearance for the duration of the lawsuits, meaning millions of borrowers do not have to make payments and will not accrue interest on their loans until further notice.

Why Would Borrowers Want to Restart Payments?

Since SAVE plan borrowers cannot make payments, some are prevented from having their loans forgiven under the Public Service Loan Forgiveness (PSLF) program.

PAYE and ICR applications will expire again on July 1, 2027. This will give the Department of Education time to “build a version of the SAVE plan that complies with the Eighth Circuit’s injunction pending appeal,” it said.