Federal Court Blocks SAVE | What PSLF Candidates Need to Know

We hate to bother you at the start of the week, but some key announcements late last week regarding the ongoing SAVE saga warrant our reaching out.

As of now, the SAVE plan remains blocked by a federal court. For the 8 million borrowers enrolled, you’ll be in (another) forbearance while the legal battle unfolds. The silver lining here? No payments are required, and interest will not accrue during this time. So, short-term, this is actually excellent news for SAVE participants.

However, unlike previous payment pauses, this break will NOT count towards the PSLF program. We expect some form of retroactive credit will be available once a decision on SAVE is made, but we wanted to make you aware of this detour from past Biden-era forbearances.

As a result, the PAYE plan is back on the table, should the SAVE plan not withstand the legal challenge. Meanwhile, online consolidation and IDR plan applications are temporarily unavailable while servicers update their records amid the SAVE plan uncertainty. Don’t worry, though—you can still get this done through PDF applications if necessary. Here’s the update from ED regarding all of this.

What should you do?

While it’s unsettling to hear that this pause won’t immediately count towards PSLF, the “PSLF Buyback Program” will roll out later this year. This program will allow you to pay an amount equal to the smallest PSLF-qualified monthly payments you would have had during any non-qualified forbearance period. The Department of Education is expected to reach out to eligible borrowers once the final IDR account adjustment is complete.

Our recommendation? Avoid switching plans right now. Processing times may exceed the payment break, so it’s best to stay patient and let this process play out in the near term.

BenElevate Clients: You can update your profile anytime in your BenElevate dashboard.

New to BenElevate or looking for 1-1 support? Register for a PSLF Assessment and 30-minute support session at a 25% discount.These sessions can include communicating with Federal Student Aid, updating your IDR plan, tax filing strategies, etc. We invite spouses and Financial Advisors to attend as well.

‘til DEBT do us part,

About Author

Jason DiLorenzo

Jason is the Founder of BenElevate, an early stage fintech company working to address the student debt crisis by bringing to bear tools, expertise, and bespoke solutions to streamline student debt management for borrowers and employers.