The statutory authority used to create the SAVE plan has been used three times previously.  Every Presidential Administration since the 1990s has used that authority to create or continue to offer repayment plans that included certain common elements such as forgiveness after 20 or 25 years of payments.

However, a court injunction is preventing the Department from implementing parts of the SAVE Plan and three other plans created years ago using the same authority. The most recent injunction harms borrowers who have dutifully repaid their loans for up to 25 years by denying forgiveness that has been available under law for 30 years. If the injunction is made permanent, borrowers could be forced to pay hundreds of dollars more each month.

The Biden-Harris Administration will continue to vigorously defend the SAVE Plan and our efforts to provide more affordable repayment options in court.

As the litigation continues to unfold, we are providing an update on what to expect in the coming months.

The ongoing litigation affects borrowers’ choices among the five Income-Driven Repayment plans, including the two IBR plans created by Congress and the SAVE (formerly REPAYE), PAYE, and Income-Contingent Repayment plans created by the Department. The litigation also affects borrowers seeking Public Service Loan Forgiveness (PSLF) because most borrowers choose to repay their loans on an IDR plan while working toward forgiveness.

What is coming:

First, the Department is working with servicers and contractors to update their systems to align with the terms of the SAVE plan, based on the terms of the injunction. This process will take several months because the update requires significant changes to a number of systems used by several Department contractors, and further court actions are possible in the meantime. Borrowers will also need a reasonable opportunity to make another choice about which of the updated options is best for them.

Second, the Department will take regulatory action this fall to reopen the PAYE and ICR repayment plans to new enrollees. These plans were closed to most new enrollment starting on July 1 because the SAVE plan offered the same or better benefits.  We’ve heard from a lot of borrowers about wanting to make sure they have options to support their needs, especially those seeking months of PSLF or IDR credit. With this goal in mind, the Department plans to take regulatory action to reopen PAYE and ICR repayment plan to new enrollees, who otherwise meet the eligibility.

For most borrowers who want PSLF or IDR credit right now, the only plan currently available is IBR.  For borrowers who would prefer to make payments during this time period — such as borrowers pursuing PSLF, borrowers close to their IDR repayment milestone, and low-income borrowers who would owe no monthly payments — enrolling in PAYE or ICR may be a good option.

The reopening of PAYE, in particular, will be the fastest path for borrowers seeking PSLF to keep working toward forgiveness. The Department will share more in the coming weeks on the timeline for this repayment plan change.

We are also continuing to work to improve operations for the PSLF Buy Back program. The Biden-Harris Administration created this program to enable some borrowers to make loan payments in order to obtain months of PSLF credit for time spent working in public service while their loans were in forbearance or in other non-PSLF-eligible repayment statuses. 

Borrowers with at least 120 months of eligible employment can make payments to cover past months. Borrowers must submit a buyback request and make an extra payment of at least as much as what they would have owed under an income-driven repayment (IDR) plan during the months they are trying to buy back.

The Department is also taking steps to operationalize a process to allow borrowers to buy back months for IDR credit in late 2025. In the coming weeks, we will post more information for borrowers on ED.gov/SAVE and StudentAid.gov/saveaction.

What borrowers need to know now:

First, the 8 million borrowers in SAVE and anyone who has applied for SAVE should expect to remain in interest-free general forbearance for six more months or longer as the Department re-programs its systems, pending further developments from the 8th Circuit Court of Appeals.  

Second, borrowers should be aware that forgiveness as a feature of any IDR plan created by the Department is currently enjoined. That includes the SAVE (formerly REPAYE), PAYE, and ICR repayment plans. Borrowers who reach their plan’s repayment milestone—that is, 25 years in repayment for borrowers on any of these plans or 20 years for undergraduate-only borrowers in PAYE or SAVE — will be moved into an interest-free forbearance, if they are not already in a forbearance as a result of the litigation.

We are continuing to fight in the courts to restore forgiveness for these IDR plans. The Department can and will still process loan forgiveness for the Income-Based Repayment (IBR) repayment plans, which were separately enacted by Congress.  

Finally, the Department and its servicers will soon resume processing  IDR applications for borrowers applying for IBR and some borrowers applying for PAYE or ICR and have reinstated a simplified version of the online IDR application to support borrowers’ enrollment in IDR plans. These steps will help borrowers enroll in IDR, reducing their monthly payments and earn IDR and PSLF credit, as the Department continues to implement the law enacted by Congress requiring borrowers to return to repayment after the pandemic payment pause.

In reviewing their IDR options, borrowers may find the below table helpful:

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