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The Saving on a Valuable Education (SAVE) Plan, a federal student loan repayment program, has been making headlines recently due to pending lawsuits by certain states. This article aims to shed light on the current status of the SAVE Plan and the implications of these legal challenges.
What is the SAVE Plan?
The SAVE Plan is an income-driven repayment (IDR) plan that replaced the Revised Pay As You Earn (REPAYE) Plan. It aims to provide more manageable monthly payment amounts for student loan borrowers, particularly those with low or middle incomes3. The plan calculates monthly payments based on the borrower’s income and family size, potentially lowering payments to as low as $0 per month.
The Current Status of the SAVE Plan
On July 18, 2024, a Federal Court issued a stay preventing the Department of Education from operating the SAVE Plan3. This decision came in response to lawsuits filed by several states challenging the legality of the plan456. Despite this setback, the Department of Education is assessing the ruling and will be in touch directly with borrowers about how this will affect them3.
The Pending Lawsuits
Several states, led by Missouri and Kansas, have filed lawsuits against the SAVE Plan12. These states argue that the plan exceeds the Education Department’s authority, hurts the states’ bottom lines, and represents just another version of the broad-based debt-relief plan that the Supreme Court struck down last summer.
Three states—South Carolina, Alaska, and Texas—have been allowed to proceed with their lawsuit. These states have “public instrumentalities” that hold federal family education loans, which they claim could be negatively impacted by SAVE.
The Implications
The legal challenges to the SAVE Plan have resulted in a temporary halt to its operations3. This means that for now, borrowers enrolled in the SAVE Plan won’t owe payments until the legal situation is resolved.
However, the future of the SAVE Plan remains uncertain. If the lawsuits succeed, it could mean significant changes to the plan or even its discontinuation. On the other hand, if the lawsuits fail, the SAVE Plan could resume its operations and continue to provide relief to student loan borrowers.
The SAVE Plan is currently in a state of flux due to legal challenges. Contact us, and we can help you navigate your loans and what is best for you to take control in these uncertain times!
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