The Biden administration’s new relief program called the Saving on a Valuable Education Plan (SAVE) has put federal student loan payments on hold for millions of borrowers. This move by the U.S. Department of Education has sparked a legal battle that has left many borrowers in limbo.
What is SAVE?
SAVE is an income-driven repayment plan that offers lower monthly payments and quicker debt erasure for borrowers with small balances. The program aims to provide relief to those struggling with student loan debt, but it has faced challenges from Republican-led states who believe the Education Department overstepped its authority.
Republican-led states have sued the Education Department over SAVE, arguing that the agency is trying to forgive student debt through a roundabout way. A federal appeals court in Missouri recently issued a ruling blocking the entire plan, leaving the future of the program uncertain. Despite the legal challenges, the Education Department has already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE Plan.
While borrowers enrolled in SAVE are granted a payment pause during the legal battle, the months in forbearance will not count towards their progress towards loan forgiveness. This means that those hoping to have their debt cleared under the income-driven repayment plan’s terms or Public Service Loan Forgiveness program are not getting credit on their timeline to loan cancellation. Borrowers are unable to opt out of the forbearance, but they can explore other repayment plan options that may lead to higher monthly payments.
Expert Opinion
According to higher education expert Mark Kantrowitz, borrowers in the SAVE plan do not lose anything other than time by staying in the program. While the future of the program remains uncertain, the Education Department has vowed to fight to protect the plan and the borrowers who have already received relief should be in the clear. However, with ongoing legal battles and uncertainty surrounding the program, borrowers are left in a state of financial limbo.
Overall, the Biden administration’s student loan relief program has had a significant impact on millions of borrowers. While the program aims to provide relief and support to those struggling with student loan debt, legal challenges have created uncertainty and confusion for many. As the SAVE plan continues to play out in court, borrowers are left waiting to see what the future holds for their financial stability.