Amid Legal Challenges ED Pledges to Continue Implementing SAVE Plan to the ‘Fullest Extent Possible’
By Maria Carrasco, NASFAA Staff Reporter
The Department of Education (ED) has committed to implementing the Saving on a Valuable Education (SAVE) repayment plan "to the fullest extent possible" following legal challenges that have halted some provisions of the plan.
The commitment came in a recent email to some student loan borrowers, and follows a pair of legal challenges that have created uncertainty around the future of the program.
In June, a pair of federal judges in Missouri and Kansas issued separate injunctions that blocked ED from fully implementing the SAVE repayment plan. In Kansas a judge halted a provision of the program, which calculated monthly payments by using half the current percentage of discretionary income for undergraduate borrowers, lowering the rate from 10% to 5%. In Missouri’s separate ruling a judge enjoined ED from forgiving any more loans through the program.
In response, on June 30, the 10th Circuit Court of Appeals halted the Kansas judge’s injunction, meaning that specific provision of the SAVE plan, concerning the calculation of monthly payments, can move forward as planned, for now.
Following these actions Education Secretary Miguel Cardona wrote to borrowers through a recent email. In the email Cardona told borrowers that ED will continue to implement the SAVE repayment plan and confirmed that the program is still available for borrowers to enroll in. Cardona also wrote that borrowers can still benefit from the “vast majority of its provisions.”
However, the 10th Circuit Court of Appeals’ decision does not impact the ruling made by a Missouri judge, which blocked a provision that would allow ED to forgive some borrowers' loans after 10 years of repayments, instead of the 20 or 25 years currently required in other income-driven repayment (IDR) plans. Cardona clarified that while this provision is on hold, ED will “keep fighting” and will update borrowers with any new developments.
ED also noted that some borrowers might have been placed in a temporary, zero-interest forbearance while their new monthly payments are being calculated under the SAVE plan. According to ED these borrowers will receive direct contact from their loan servicer with their new payment amount and next due date.
“While we disagree with the Republican elected officials’ efforts here to side with special interests and block borrowers from getting breathing room on their student loans, President Biden and our administration will not stop fighting to make sure Americans have affordable access to the life changing opportunities a higher education can provide,” Cardona wrote. “We will continue to put the needs of students and borrowers first, help borrowers access the support and resources they need, and make the promise of higher education a reality for more American families.”
Publication Date: 7/18/2024
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