The US Supreme Court has temporarily halted the implementation of SAVE, a new federal student loan repayment program. Now, approximately eight million borrowers who were enrolled in the program will have their loans placed in interest-free forbearance.
Launched in August 2023, the Saving on a Valuable Education, or SAVE, was described as the “most affordable repayment plan ever.” However, the administration now faces lawsuits from Republican-led states like Arkansas, Florida and Missouri that argue that the administration is overstepping its authority.
In response to the court order, an Education Department spokesperson stated: “We are assessing the impacts of this ruling and will contact borrowers directly with any impacts that affect them.”
Before facing legal issues, the department had already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE plan. Applications for the SAVE plan and other income-driven repayment plans are currently unavailable.
With the pause in implementing the SAVE plan, how much borrowers will owe each month after the plan is implemented is unclear.