SAVE plan borrowers whose deadlines to pick a new student loan repayment plan have already passed are still waiting to learn what they will owe, and the U.S. Department of Education has told a law firm that it does not know when they will be moved. Business Insider reported the admission, which appears in a legal filing made Monday, November 9, by the law firm Public Goods Practice as part of its ongoing lawsuit to restore benefits for borrowers in the plan.
SAVE, short for Saving on a Valuable Education, is an income driven repayment plan created under the Biden administration. Income driven means the monthly bill is tied to a borrower’s income and family size instead of the size of the loan. Republican led states sued over the plan, and court rulings blocked key parts of it from taking effect. Newsweek reports that the Education Department announced in March that SAVE would end after a court approved a settlement between the department and Missouri. About 7.5 million borrowers were enrolled.
Beginning in July, the department sent notices giving SAVE plan borrowers 90 days to choose a new plan. Borrowers who did not act then received a “final notice” with 30 more days. The department said in those notices that anyone who did not choose would be placed on the standard plan automatically, which carries the highest monthly payments. According to the filing as described by Business Insider, some of those 30 day windows have now expired with no transfer and no new payment amount, and those borrowers remain in forbearance, a pause on required payments. Newsweek reports that up to 5.5 million borrowers have not yet been moved off SAVE, and that the department said in late October that nearly 2 million borrowers had chosen a new plan.
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The new filing asks the department to explain what comes next and to lay out a timeline. When lawyers for Public Goods Practice asked, department counsel said the department does not know when borrowers whose 30 day period has expired will be moved to new plans, according to the filing. In July, the same firm asked the court to block involuntary transfers off SAVE. The department opposed that request and urged borrowers to enroll in what it called “a lawful repayment option.” The department did not answer repeated questions from Business Insider about the transfer timeline.
The department has defended ending the plan. Under Secretary Nicholas Kent said in a statement quoted by Newsweek that the guidance “puts the Biden Administration’s illegal student loan bailout agenda to rest once and for all” and that “if you take out a loan, you must pay it back.” Kent also said affected borrowers “will be given at least 90 days to enter a legal repayment plan of their choice.”
The main option for most SAVE plan borrowers is the Repayment Assistance Plan, known as RAP, which became available July 1 as part of Donald Trump’s overhaul of student loan repayment. Some borrowers may qualify for Income Based Repayment instead, and borrowers who never choose could end up in a Standard or Tiered Standard plan. Business Insider reports that borrowers describe higher monthly payments under RAP than they had under SAVE, and that many worry about falling into default, which can lead to wage garnishment and the government taking part of federal benefits such as tax refunds.
The court has not yet ruled on the new filing, and no transfer date has been announced. Borrowers still on SAVE can confirm their status, their deadlines and the plans open to them with their loan servicer or the Education Department’s Federal Student Aid office.
