Latest news with #SAVEplan
CNET
23-05-2025
- Business
- CNET
Attention SAVE Borrowers: Don't Expect Student Loan Payments to Resume This Year. Do This While You Wait
Pla2na/Getty; CNET If you're one of the eight million borrowers who signed up for the Saving on a Valuable Education student loan repayment plan, you're probably wondering what's next for your student loans. There has been a barrage of student loan updates since President Donald Trump's administration came into office, including proposed changes to Public Service Loan Forgiveness eligibility, an effort to restart collections on defaulted student loan accounts and a new Republican-fronted bill seeking to change existing income-driven repayment plan options. Yet, aside from an expected court ruling blocking SAVE, little has been said about what's actually happening for borrowers enrolled in this payment plan. For now, your loan payments remain paused in a general forbearance and your balance isn't collecting interest. That also means you're not making progress toward a loan forgiveness program like PSLF during the payment pause. While you can choose to switch to an alternative repayment plan, most experts are encouraging borrowers to wait it out. I talked to experts to help you understand what's next for your student loans so you can prepare for when the forbearance ends. When will SAVE borrowers restart repayments? It's not clear when payments will start again for borrowers on the SAVE plan but it's looking like the end of this year would be the earliest timeframe. The Department of Education's website says SAVE plan borrowers will stay in a general forbearance until at least the fall. It also directed loan servicers to adjust the income recertification deadline to no earlier than Feb. 1, 2026. Robert Farrington, student loan expert and founder of The College Investor, expects the general forbearance to last even longer. "Borrowers will likely see the SAVE forbearance end in mid-to-late 2026," says Farrington. "Many borrowers are already reporting the end date of their forbearance moving to September 2026." Should PSLF borrowers take action to get debt relief sooner? If you're a teacher, nurse or other public servant pursuing PSLF, you may be worried that the payment pause is not counting toward your 120-payment requirement. That leaves you with three options. First, you could switch from SAVE to another income-driven repayment plan (ICR, IBR or PAYE). That way, your payments will count toward PSLF's 120-payment requirement. Alternatively, if you would have hit 120 months of on-time payments if not for the pause, you can apply for the PSLF Buyback program to get credit for your time in forbearance. "This program [allows borrowers] to make a lump-sum payment for any months spent in administrative forbearance under SAVE, ensuring those months count towards PSLF," explains Megan Walter, NASFAA senior policy analyst. The downside of these first two options is that borrowers have been reporting processing delays. So don't expect a fast response. Last, if you've recently enrolled in PSLF or are not close to receiving forgiveness, you might prefer to wait until you're moved into a new payment plan. Yes, your months in forbearance won't count toward your 120-payment goal, but this could give you time to start saving for a potentially higher student loan payment. Whether you decide to change plans now or wait, make sure your decisions align with your financial goals. With SAVE no longer an option, it's important to understand all your avenues for paying back your student loans. What can SAVE borrowers do now? That doesn't mean you should sit back and do nothing, though. Take this time to prepare for the likelihood that your payments will increase in the future. You can use the Federal Student Aid's Loan Simulator tool to help calculate how much your monthly payment will be under different payment plans. While your payments are paused, you won't have to worry about your account being moved to collections. Although borrowers with defaulted loans are once again subject to collections, including wage garnishment, those enrolled in the SAVE plan don't have to worry about those consequences for now. Use this time to improve your finances, suggested Farrington. "This is a great time to pay off other debts (including private loans), build an emergency fund, contribute to an IRA and more." If you have the wiggle room in your budget, start paying yourself each month the same amount you'd pay your student loan servicer. Put this money into a high-yield savings account to earn a little extra interest on your savings.
Associated Press
16-05-2025
- Business
- Associated Press
Student loans have been confusing lately. Here's a guide to know where you stand
NEW YORK (AP) — Between collections resuming, courts blocking student loan programs and layoffs at the Education Department, borrowers might be confused about the status of their student loans. Recently, the Education Department announced it would start involuntary collections on defaulted loans, meaning the roughly 5.3 million borrowers who are in default could have their wages garnished by the federal government. At the center of the turmoil are the government's income-driven repayment plans, which reduce monthly payments for borrowers with lower incomes. Those plans were temporarily paused after a federal court blocked parts of the plans in February. 'There's so much confusion, they've made it very complicated,' said Natalia Abrams, president and founder of the Student Debt Crisis Center. At the same time, some borrowers are struggling to get their loan servicers on the phone, making it hard to find answers to their questions, said Abrams. If you're a student loan borrower, here are some answers to your questions. What if I want to enroll in an income-driven repayment plan? Applications for income-driven repayment plans are open, but they're taking longer than usual to process. The applications were temporarily shut down earlier this year after a federal court in Missouri blocked the SAVE plan, a Biden administration plan that offered a faster path to loan forgiveness. The judge's order also blocked parts of other repayment plans, prompting the Education Department to pause income-driven applications entirely. Amid pressure from advocates, the department reopened the applications on May 10. Borrowers can apply for the following income-driven plans: the Income-Based Repayment Plan, the Pay as You Earn plan and the Income-Contingent Repayment plan. Abrams expects applications will continue to be approved but at a slower pace than before the application pause. Borrowers currently enrolled in an income-driven plan should be receiving notifications about recertification, said Khandice Lofton, counsel at the Student Borrower Protection Center. Recertification is required annually to update information on family size and income, and dates are different for each borrower. To review income-driven repayment plans, you can check the loan simulator at What if I applied to the SAVE plan? Borrowers enrolled in the SAVE plan have been placed in administrative forbearance while a legal challenge is resolved. That means they don't have to make payments and interest is not accruing. Time in forbearance normally does not count toward Public Service Loan Forgiveness. The Education Department will notify borrowers with updates on payments and litigation. 'We don't know for sure when the SAVE forbearance is going to end,' Abrams said. While the future of the SAVE plan is decided in court, Abrams encourages borrowers to explore their eligibility for other income-driven repayment plans. What if I want to consolidate my student loans? The online application for loan consolidation is available again, at If you have multiple federal student loans, you can combine them into one with a fixed interest rate and a single monthly payment. The consolidation process typically takes around 60 days to complete. You can only consolidate your loans once. What if my loan was forgiven? It would be difficult for the Education Department to reinstate loans that were canceled during President Joe Biden's administration. So far, it isn't believed to be happening, Abrams said. What about the Public Service Loan Forgiveness program? Nothing has changed yet. President Donald Trump wants to change the Public Service Loan Forgiveness program to disqualify workers of nonprofit groups deemed to have engaged in 'improper' activities. He signed an executive order to that effect, but it has yet to be enforced. Borrowers enrolled in PSLF should keep up with payments to make progress toward loan forgiveness, said Sarah Austin, policy analyst at the National Association of Student Financial Aid Administrators. 'There could be some changes coming in regards to PSLF but at this current time PSLF is still functioning and there is still loan forgiveness being processed under the PSLF provision,' said Austin. An income-driven repayment tracker has disappeared from the federal student loan website for many borrowers, said Abrams. For keeping track of their status, Abrams is recommending that borrowers take screenshots of their payments. What if I can't get a hold of my loan servicer? Contacting your loan servicer is crucial to managing and understanding your student loans. Due to the large number of people trying to get answers or apply for programs, loan servicers are taking longer than usual to respond. Abrams recommends borrowers prepare for long wait times. 'We've heard borrowers being in hold for three or four hours, then being transferred to a supervisor and then being hung up on, after all that wait time. It's incredibly frustrating,' Abrams said. What can I do if I'm delinquent on my student loans? If you're delinquent, try to get back on track. Borrowers who don't make their payments for 270 days go into default, which has severe consequences. 'If you're delinquent but have not defaulted yet, do whatever you can do to avoid going default,' said Kate Wood, a student loans expert at NerdWallet. Borrowers who are delinquent on their student loans take a massive hit on their credit scores, which could drop 100 points or more, Wood said. A delinquency stays on your credit report for seven years. Wood recommends contacting your servicer to ask for options, which can include forbearance, deferment or applying for an income-driven repayment plan. What if I'm in default on my student loans? The Education Department is recommending borrowers visit its Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan or sign up for loan rehabilitation. Betsy Mayotte, president of The Institute for Student Loan Advisors, recommends loan rehabilitation. Borrowers in default must ask their loan servicer to be placed into such a program. Typically, servicers ask for proof of income and expenses to calculate a payment amount. Once a borrower has paid on time for nine months in a row, they are taken out of default, Mayotte said. A loan rehabilitation can only be done once. What happened to Fresh Start? The Fresh Start program was a one-time temporary program that helped borrowers get out of default. This program ended Aug. 31, 2024. ___ The Associated Press receives support from Charles Schwab Foundation for educational and explanatory reporting to improve financial literacy. The independent foundation is separate from Charles Schwab and Co. Inc. The AP is solely responsible for its journalism.
Forbes
10-05-2025
- Business
- Forbes
Key Student Loan Update For 2 Million Borrowers As IDR Applications Finally Get Processed
US Education Secretary Linda McMahon speaks during the Milken Institute Global Conference in Beverly ... More Hills, California , on May 6, 2025. The Department of Education is resuming processing of IDR applications this week. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images) Repayment plan processing for hundreds of thousands of federal student loan borrowers trying to enroll in income-driven repayment plans should finally be back in full swing as of Saturday, according to the Department of Education. That's good news for borrowers who had been prevented from accessing affordable monthly payments and pathways to student loan forgiveness following months of chaos. The ongoing problems were associated with the fallout from a legal challenge over the SAVE plan, one of several income-driven repayment plan programs that offer borrowers lower payments based on their income and family size, and eventual student loan forgiveness (typically after 20 or 25 years). Income-driven plans are also usually required for borrowers enrolled in Public Service Loan Forgiveness, a separate program that can shorten the student loan forgiveness timeline to as little as 10 years for those who commit to full-time nonprofit or government work. A federal appeals court issued an injunction earlier this year extending a block on the SAVE plan that had been in effect since last summer. That, in turn, led the Department of Education to temporarily shut down the entire income-driven repayment plan application system. But as of Saturday, the IDR application system should be fully back up and running, according to assurances made by top department officials. Here's what student loan borrowers should know. In February, the Department of Education took down the applications for income-driven repayment plans and halted all processing after a federal appeals court blocked Biden-era regulations governing the SAVE plan. Even though the associated legal challenge technically is only about the SAVE plan, the Trump administration had argued that the associated regulations impacted the other income-driven plans, as well – ICR, IBR, and PAYE. 'The latest court actions significantly affect preexisting ED rules on its loan programs and IDR plans,' the Department of Education said in guidance it updated last week. 'As a result, the IDR and online loan consolidation applications were temporarily unavailable.' The department argued that the injunction impacted repayment plan calculations for ICR, IBR, and PAYE, even though only SAVE itself was enjoined by the court. In response to the department's systemwide IDR application shutdown, the American Federation of Teachers filed a lawsuit against the Trump administration, arguing that the Department of Education's actions were unlawfully preventing millions of federal student loan borrowers from applying for IDR plans, requesting payment recalculations, recertifying their income, or switching plans. In particular, millions of borrowers who had enrolled in SAVE and were put into an involuntary forbearance last summer due to the legal challenge were unable to switch to IBR or other income-driven plans to resume progress toward student loan forgiveness, including for PSLF. After the AFT filed its lawsuit, the Department of Education changed course and restored access to the IDR application, but only for the ICR, IBR and PAYE plans, as SAVE remains blocked. However, processing of applications did not immediately resume. Then, in April, a top department official filed a sworn declaration indicating that IDR processing for the ICR, IBR, and SAVE plans would fully resume by May 10th. 'Education directed its servicers to resume placing borrowers that apply for ICR, PAYE and IBR into their respective plans as soon as possible,' said the declaration. 'At present, based on information provided by servicers, Education expects that servicers will be able to resume doing so by May 10, 2025.' Anecdotal reports indicate that some loan servicers started processing IDR applications weeks ago, and some borrowers trying to leave the SAVE plan forbearance have started to be moved into IBR as of this week. Payments made under the SAVE plan that counted toward student loan forgiveness should also count toward student loan forgiveness under IBR. 'Borrowers can have their loans forgiven if they are enrolled in the IBR Plan,' says the department in its updated guidance. 'Payments on PAYE, SAVE, and ICR are counted toward IBR Plan forgiveness if the borrower enrolls in the IBR Plan.' While applications for ICR, IBR, and PAYE should be processed, it is unclear at this juncture how loan servicers will handle earlier versions of IDR applications where borrowers may have selected the SAVE plan or an alternative option that allows their servicer to pick their repayment plan for them based on the lowest available monthly payment. Neither of those options are available on the updated version of the IDR application that the Department of Education released last month. Student loan borrower advocacy groups, including the AFT, have remained concerned that despite the Department of Education's assurances that IDR processing is resuming for the ICR, IBR, and PAYE plans, borrowers may experience lengthy processing times. The department indicated last month that there is now a backlog of nearly two million IDR applications. 'Education does not currently have an estimated date for when servicers will have completed processing the backlog of IDR applications,' reads the department declaration submitted in April. 'This timeline is due to the servicers' internal procedures. Specifically, before servicers can begin to process applications, they must update the processing rules in their systems according to the terms of their contracts with Education.' The good news for borrowers, however, is that the AFT and the department reached an agreement in the AFT's legal challenge for the department to provide concrete updates, in publicly available status reports filed with the court, on loan servicers' progress in processing IDR applications. The first such status report is due later this week. 'Defendants' first status report shall be due on May 15, 2025, and subsequent status reports will be due every 30 days thereafter,' reads the joint status report submitted by the AFT and the Department of Education in April. Each status report will include information on "the number of income-driven repayment (IDR) applications that were pending at the end of the preceding month' and 'the number of IDR applications that were decided (that is, approved or denied) during the preceding month.' 'After the filing of the third status report, the parties will confer about the need for further reporting, and (if necessary) will jointly or separately request relief from the Court to terminate or modify the reporting obligation,' reads the joint status report. This essentially means that if IDR applications are being successfully processed, court monitoring may end. If processing is insufficient, the AFT may seek further recourse through the court. The joint status report also indicates that the Department of Education will provide periodic updates on applications for PSLF Buyback, a program that allows borrowers to request student loan forgiveness credit for certain non-qualifying deferment and forbearance periods. As with IDR, PLSF Buyback application processing has been largely stalled since last summer, with an unclear number of borrowers stuck in limbo. These borrowers may get more information in the coming days on where things stand with their application.
