politics
Federal Court Strikes Down SAVE Student Loan Plan, Affecting 7.5 Million Borrowers
The Independent reported that a March federal court ruling declared the SAVE repayment plan illegal. Seven point five million borrowers must now select new plans within 90 days of receiving notice from their servicer. All notices will be sent by the end of the year.
Jul 16, 3:03 PM·1m read1 source
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A federal court ruled in March that the SAVE student loan repayment plan was illegal. The plan had been launched by the Biden administration in 2024. The decision affects 7.5 million borrowers who must now select a new repayment plan.
Borrowers have 90 days to choose from available options after their loan servicer sends notice. The Department of Education stated that the 90-day period begins upon receipt of that notice. All notices will be sent by the end of the year, according to loan servicer Nelnet.
The Department of Education removed the SAVE plan from its repayment options on July 1. It also plans to phase out income-contingent and pay-as-you-earn plans by June 30, 2028, the Institute for College Access and Success reported. Borrowers who do not select a plan within the deadline will be placed in a standard or tiered standard repayment plan.
Borrowers can contact their servicer or use the Department of Education’s student loan repayment calculator. The tool requires tax filing status, adjusted gross income, family size, and current loan information. The department noted that estimates are based on assumptions that may not apply to individual borrowers.
Payments under the SAVE plan were up to 5 percent of borrower income. Current available plans require payments of 10 percent to 20 percent of income. Reddit user shibalvr97 stated their monthly payment increased from $0 to $286 after switching from SAVE.
