July 1, 2024
If you are one of the 8 million borrowers who are enrolled in the SAVE income driven repayment program and you were expecting your loan to be forgiven through that program – well, that’s not going to happen…for now. But all the new features of the program that took effect today – can happen…for now.
Why the all this “for now?” Stuff. Because the whole SAVE program is now in the crosshairs of the federal courts.
So stick with me…last week two federal judges issued two separate opinions – both of which halted parts of President Biden’s new SAVE program because in each case —the states suing including Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, Oklahoma, Alaska, South Carolina and Texas are arguing that congress didn’t approve this program and if the courts allow it to continue — it’ll hurt the state’s revenue by taking away all the money they get from interest and fees generated off of your student loans.
In Missouri last week a federal judge issued a preliminary injunction that stops the Department of Education from forgiving any more federal student loans through the save program. It appears – that if your loans were already forgiven under the save program specifically – you should be ok. But this order says as of June 24th no additional federal student loans can be forgiven under the SAVE program….at least not for right now. Of course, loans can still be forgiven under all the other student loan forgiveness programs that are available. This order *only* applies to forgiveness under the save program.
But that’s not the only problem the SAVE program is facing. In Kansas a separate federal judge imposed another preliminary injunction last week to pause the features of the SAVE program that took effect today – July 1st. That includes features like reducing your undergraduate loan payments from 10% down to 5% of your discretionary income, and shortening the window to forgiveness from 20 or 25 years – to in some cases — down to 10. The Kansas judge’s order did not impact the parts of the SAVE program that were already in effect.
Well – after the Department Education appealed –yesterday, a panel of judges in the 10th Circuit Court of Appeals said no – the Kansas judge’s injunction cannot happen. All the features of the SAVE program can take effect today. And they did. The judges did not give a reason why they paused or put a “stay” on the Kansas judge’s ruling.
But neither of these cases are not over. Both of them are continuing to play out in Kansas and Missouri so things can change again.
I know this is all probably very confusing to you. The education department is still sorting it all out too. But what they have said is — if you are part of the save program and have already received a bill from your loan servicer with the new lower amount the education secretary says you should pay that amount. If you have a question about what you should be paying — you should check your loan account or contact your loan servicer.
