The SAVE Plan Implementation and PSLF Processing Pause: What We Know and How AccessLex Can Help

SAVE Plan: What We Know

Last year, the Biden-Harris Administration created the Saving on a Valuable Education (SAVE) plan, an income-driven repayment (IDR) plan aimed at lowering monthly payments and overall loan balances for most student loan borrowers. The SAVE plan was implemented in stages, with some elements, such as increasing the amount of protected income, going into effect last July and the rest, such as lowering monthly payments, going into effect July 1, 2024.

However, this spring, two groups of states sued the administration in separate lawsuits to block the SAVE plan, arguing that it does not have the authority to alter student loan repayment plans.

• In the Kansas-led case, the judge granted a preliminary injunction preventing the U.S. Department of Education (ED) from implementing parts of the SAVE plan that were slated to go into effect on July 1, such as lowering monthly payments to five percent of discretionary income for those with only undergraduate loans and to between five and 10% for borrowers with both undergraduate and graduate loans. In response, ED placed about three million SAVE borrowers into forbearance, freezing their payments and interest. In the meantime, ED appealed the injunction and was granted a stay, which allowed the lower payments to go into effect on July 1. 
• In the lawsuit led by the Missouri attorney general, the judge granted a preliminary injunction blocking ED from authorizing any further loan forgiveness under the SAVE plan until the case is resolved. ED appealed the injunction but was denied. Missouri then filed an emergency motion asking the Eighth Circuit Court of Appeals to prevent ED from implementing a provision that lowers the monthly payments for borrowers, which the state alleges is a way for ED to evade the injunction and provide loan forgiveness for those with $0 monthly payments. On July 18, the court ruled that ED must stop implementing SAVE in its entirety while the case is ongoing.
• In response to the Eighth Circuit’s ruling, ED Secretary Miguel Cardona announced that borrowers enrolled in the SAVE plan will be placed in an interest-free forbearance while the Biden Administration “continues to vigorously defend the SAVE Plan in court.” 

PSLF Processing Pause: What We Know

The Public Service Loan Forgiveness (PSLF) program, which allows Direct Loan borrowers to have their loans forgiven if they work for certain public service employers for 10 years, has always been managed by one servicer – first by Pennsylvania Higher Education Assistance Agency (PHEAA), but more recently by Missouri Higher Education Loan Authority (MOHELA). However, ED recently began transitioning public-facing loan servicing from individual servicer websites to ED (via studentaid.gov). The goal is for borrowers to manage their loans and benefits, including PSLF, via a single platform without having to change servicers. As part of this transition, ED paused the processing of all PSLF forms and applications beginning on May 1. The pause recently ended in early July.

During the pause, borrowers were not able to see any updates to their PSLF payment counts or submitted forms, they did not receive any loan forgiveness, and they were not able to get questions answered about their PSLF status.

How Do Recent Actions Impact Borrowers?

The online application portals for income-driven repayment (IDR) plan requests and the federal loan consolidation application are temporarily unavailable. Borrowers seeking to apply for an IDR plan and/or consolidate their loans need to submit PDF applications directly to their servicer by following the steps listed at studentaid.gov. While the processing of IDR plan requests is currently paused, loan servicers should reach out with further details once existing and submitted PDF applications are eventually processed and the electronic portals are back online.

Borrowers who are already on the SAVE Plan, or who are choosing between the SAVE Plan and another income-driven repayment plan, will want to consider the pros and cons of each choice given the current forbearance for SAVE Plan borrowers. To discuss your options and considerations impacting your decisions, schedule a call with an Accredited Financial Counselor^® via AccessConnex coaching (more information on this free service is below).

With so much of the loan repayment landscape in flux, it’s easy for borrowers to be overwhelmed. Borrowers can take this time to focus on things they can control, like:

• Logging into all loan portals and verifying accurate contact information.
• Taking screenshots of loan balances and loan details and saving them in a file for reference as needed.
• Documenting conversations with loan servicers and any other account representatives.
• Learning more about existing repayment options and options to pivot should the need arise.
• Working with financial aid offices to ensure proper and accurate aid benefits and distributions for current programs.
• Checking back with official sources of information, like StudentAid.gov and ED.gov, for updates.
• Reaching out to AccessLex Institute for help when needed.

How Can AccessLex Institute Help?

AccessConnex by AccessLex^℠ is a free, unlimited financial coaching service connecting callers with our team of Accredited Financial Counselors (AFC®). Through AccessConnex, you can schedule 30-minute sessions to discuss your overall student loan repayment strategy, current options based on prevailing changes to the system, and any other money questions you may have.

To prepare for your call, gather any important information that may be relevant to your questions (e.g., student loan types, balances, interest rates, current repayment plan, etc.). Your coach will call you at the scheduled time and will ask questions to learn more about your situation and discuss options you may want to consider.

Coaching with an objective, friendly AFC^® can provide you with a greater sense of control and clarity about potential next steps.

Schedule a free AccessConnex call now.

Information received through AccessConnex is not intended as tax, legal, or investment advice. You should consider whether it is appropriate for your needs, and where applicable, seek advice from a professional counselor.