Stay with SAVE for Student Loan Forgiveness, Experts Say – With 4 Exceptions

If you are registered in Savings on a Valuable Education Repayment Planyou may be wondering whether you should cancel this repayment plan after the election results this week. For now, experts say that in most cases it’s still wise to wait.
SAVE is being challenged in court, and until a final decision is made, your student loans will be suspended (meaning you won’t have to make monthly payments). But if you’re worried about the fate of student loan forgiveness, want to pay down your balance, or are close to getting debt relief through another program, you may want to consider switching to a different income-driven repayment plan.

After a two-month hiatus, online application for IDR plans is back, but options remain limited. For most borrowers SAVE it’s wise to wait for a decision instead of making changes. However, there are a few scenarios in which it may be beneficial to move your student loans out of the SAVE repayment plan.

We spoke with three student loan experts to find out when it makes sense to stick with SAVE and when it doesn’t.

What happens to the SAVE Student Loan Plan?

The Biden-Harris administration launched the program SAVE plan in the summer of 2023 to offer borrowers lower monthly repayment terms and a path to student loan forgiveness. Replacing the REPAYE plan, SAVE sought to cut payments for undergraduate borrowers in half and offered loan forgiveness in just 10 years, rather than the usual 20 or 25.

Earlier this year, two separate groups of Republican-led states sued to block the SAVE plan. In one case, a federal court successfully obtained an injunction that stopped SAVE from operating. Because of this ban, lenders are unable to bill SAVE borrowers for the required amount and have instead suspended all SAVE loans.

“Borrowers participating in the SAVE repayment plan are currently enjoying interest-free deferment,” said financial aid expert Mark Kantrowitz. “This means they do not lose any money by participating in the plan. The only thing they lose is time, since months of patience do not count toward forgiveness.”

While forbearance may offer a welcome financial break for some borrowers, others may not realize that they are not receiving loan forgiveness through the IDR debt relief pathway or programs such as Government Service Loan Forgiveness.

Read more: Student loan forgiveness is on hold again. Experts Explain What’s Next for Debt Relief

Most SAVE borrowers should stay put

The future of the SAVE repayment plan is in doubt, but switching to an alternative plan may not be worth it, experts say. First, changing plans may increase your borrowing costs.

“Changing plans could result in an increase in the borrower’s monthly payment as well as additional interest charges,” said student loan attorney Adam Minsky.

Megan Walter, senior policy analyst at the National Association of Financial Aid Administrators, also cautions against changing plans if you’ve already met the payment eligibility requirements for IDR loan forgiveness. If SAVE is approved, you will be able to achieve debt relief faster if you continue to follow this plan.

Your options for other income-driven repayment plans are also limited at this time. Although online application is again available, most borrowers can only access the income-based repayment plan.

Lenders are not processing new applications for the PAYE plan, and only borrowers with a consolidation loan paying off a parent PLUS loan can receive an income-based payment.

There are also significant processing delays, and borrowers who attempt to make changes may end up with a 60-day processing grace period during which interest will accrue.

“The court cases will eventually be resolved,” Kantrowitz said. While it is unknown how long it will take, Kantrowitz predicts it will take the courts less than a year to reach a conclusion.

Understanding the PSLF Buyback Program

While borrowers under the general forbearance of the SAVE plan do not make progress toward public service loan forgiveness, they now have the option to “buy back” PSLF loans.

As the name “buyback” suggests, you will be able to make a lump sum payment for any months you missed during the deferment. For example, if your monthly payments are normally $150 and are nine months late, making a $1,350 payment after the pause is lifted will bring you nine months closer to forgiveness.

In particular, you can redeem your loans if you:

Spent time in deferred or deferred status while maintaining PSLF-eligible employment.
Have outstanding loan balances
Reached the point where the redemption of these months will complete the 120 payment requirement for PSLF.

Pro tip: While the pause is in effect, transfer the amount you would have paid toward your student loans each month into a high-yield savings account. When the pause ends, you will have money that can be easily transferred into your account, plus you will earn some interest.

What a Trump Presidency Means for Student Loan Forgiveness SAVE

Experts don’t expect President-elect Trump to continue defending the SAVE plan. But that doesn’t mean you should abandon ship right now.

“A court decision on the SAVE repayment plan final rule is imminent,” Kantrowitz said. “This will likely be appealed to the US Supreme Court. However, it is unlikely that a hearing will take place, let alone a decision, until the Trump administration takes office.”

Since the courts have already started the process, most borrowers will benefit from waiting until a final decision is made.

When should you consider leaving the SAVE repayment plan?

There are several scenarios in which it makes sense to opt out of the SAVE plan:

Are You Close to Receiving PSLF Forgiveness?

You can also leave SAVE if you are close to right to loan forgiveness for government needs and want to apply for debt relief as soon as you can.

“Borrowers who are just months away from becoming eligible for forgiveness may want to switch to another income-based repayment plan,” Kantrowitz said.

You are eligible for forgiveness with another IDR plan

If you qualify for forgiveness through another income-based repayment plan, you may want to switch to early forgiveness of your balance. Just make sure you meet the requirements. IDRs typically require 20-25 years of on-time payments to qualify for debt forgiveness.

You are enrolled in a PSLF plan and do not want to rely on the buyback program.

You can only use the PSLF Buyback Program if it would result in you exceeding the 120 PSLF payment threshold. If you’re just starting out on your PSLF journey, you may prefer to use another eligible repayment plan.

“(Borrowers) may not want to wait years to apply for a buyback loan and will have to manually add those months to their account as they go along,” Walter said. “They may prefer to stick with a repayment plan that avoids these potentially significant delays.”

Do you want to resume payments earlier?

Another reason not to save: if you want to resume progress in paying off student loans.

“Borrowers whose priority is to pay off their loans faster, especially those early in their careers when their monthly IDR plan payments may be at their lowest, may choose to resume payments sooner rather than later,” Walter said.

If you have a low balance or can afford to pay even more than your monthly payment, you can transfer your loans from SAVE to pay off your debt faster.

How to Change Your Student Loan Repayment Plan

If you are interested in switching to another IDR plan, you can submit an IDR plan request. on the Federal Student Aid website. The application should take 10 minutes or less. You will need your FSA ID, personal information and financial information.

Here’s how to switch to a different income-based repayment plan:

Log in to your Federal Student Aid account: You can log in using your unique username and password, also known as your FSA ID.
Fill out the application to request an IDR plan: You will answer questions about your income, family size, and marital status.
Confirm your financial information: You may have to manually upload your income documentation if the IRS import tool doesn’t work.
Select IDR plan: Currently, your main option is the IBR plan. Borrowers with a consolidation loan that paid off a parent PLUS loan can also enroll in ICR.
Sign and submit the application: Your lender will process your application, but your loan may be temporarily delayed during this time.

Be sure to keep a copy of your application request and other important records, Walter said. “I recommend keeping detailed records, such as taking screenshots of your loan balances and interest rates, especially if you have multiple loans or are changing servicers.”

Pro tip: Due to processing delays, it may take some time to switch to a new plan. This may also result in higher monthly payments and higher interest charges. Weigh the pros and cons before taking any steps.

Ultimately, the decision to leave the SAVE repayment plan depends on your priorities and your repayment situation. However, despite all the processing delays and uncertainty surrounding IDR plans, most borrowers will benefit from staying on SAVE and waiting to see what happens next.