A Federal court issued an injunction preventing the U.S. Department of Education (ED) from implementing parts of the SAVE Plan and other IDR plans.

How It Affects Borrowers

Bills and payments:

Borrowers, and employers on borrowers’ behalf, can make a payment during this forbearance. That payment will be applied to future bills due after this forbearance ends. Borrowers who do not want to be in this forbearance can contact their servicer to change repayment plans. There will still be forbearance associated with changing to certain repayment plans.

What are the SAVE Plan benefits going into effect next year?

The SAVE Plan includes additional benefits that will go into effect in July 2024. These additional benefits are likely to reduce payments further and make it easier to manage repayment. The benefits include the following:

• Payments on undergraduate loans will be cut in half (reduced from 10% to 5% of income above 225% of the poverty line). Borrowers who have undergraduate and graduate loans will pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.
• Borrowers with original principal balances of $12,000 or less will receive forgiveness of any remaining balance after making 10 years of payments, with the maximum repayment period before forgiveness rising by one year for every additional $1,000 borrowed. For example: if your original principal balance is $14,000, you will see forgiveness after 12 years. Payments made previously (before 2024) and those made going forward will both count toward these maximum forgiveness timeframes.
• Borrowers who consolidate will not lose progress toward forgiveness. They will receive credit for a weighted average of payments that count toward forgiveness based upon the principal balance of the loans being consolidated.
• Borrowers will automatically receive credit toward forgiveness for certain periods of deferment and forbearance.
• Borrowers will be given the option to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.
• Borrowers who are 75 days late will be automatically enrolled in IDR if they have agreed to allow the Department of Education to securely access their tax information.

If you have a $0 payment due, you do not need to pay anything that month. Just make sure you know your recertification date so you don’t miss it. Then you’ll never miss your recertification date and won’t forget to re-certify your income annually.

Your monthly payment amount is based on your discretionary income—the difference between your adjusted gross income (AGI) and 225% of the Federal Poverty Line. If you are a single borrower earning $32,800 or less or a family of four earning $67,500 or less (amounts are higher in Alaska and Hawaii).

What happens if I apply for IDR after my servicer has already generated my first bill?

If you apply for the SAVE Plan close to your servicer’s bill issue date or before your required payment due date, your servicer will place you in a forbearance status for the upcoming billing cycle so that you do not pay more than you need to. Your servicer will also place you in forbearance if they cannot process your application before these dates. You can check your application status by logging onto your account with your student loan servicer.