SAVE Payment Plan Blocked: What This Means for Borrowers

May 27, 2025 | By: Ascent
Categories: Blog, For Students

Young woman reads student loan news on her laptop at the kitchen table

Student loan borrowers have a lot on their minds–and for good reason. Executive orders threatening the possible elimination of the Department of Education and a variety of other student loan changes introduce new disruptions to an already stressful situation.

The 8th U.S. Circuit Court of Appeals’ recent decision to block the Biden administration’s SAVE Plan introduced even more uncertainty. Many borrowers on the Saving on Valuable Education (SAVE) Plan now find themselves in limbo, not paying on their loans or accruing interest, but not progressing toward loan forgiveness.

Students, borrowers, and their families need to understand how recent decisions and actions by courts and Congress can impact their loans and repayment plans.

Key Takeaways

The 8th U.S. Circuit Court of Appeals upheld an injunction blocking the Biden administration’s Saving on Valuable Education (SAVE) Plan in February 2025, halting its implementation.
The Biden administration created the SAVE Plan in 2023 as an income-driven repayment plan to streamline loan payments and forgiveness for many borrowers.
As a result of the court’s decision, SAVE Plan enrollees currently have their loans in forbearance, with no payments due or interest accrued.
On March 26, 2025, the U.S. Department of Education reopened applications for Income-Based Repayment (IBR), PAYE, and ICR plans.
Ascent provides tools to help students understand the benefits and drawbacks of student loans, including how the cost of education can impact their chosen degree’s return on investment.

Understanding the SAVE Plan and Court Actions

The SAVE Plan is an income-driven repayment (IDR) program introduced by the Biden administration in 2023. It replaced the Obama-era program, which was formerly known as Revised Pay As You Earn (REPAYE). The goal of this plan was to lower monthly student loan payments and offer borrowers a faster path to forgiveness that considered their income and family size more heavily than previous plans.

However, in February 2025, a federal court injunction prevented the U.S. Department of Education from implementing the SAVE Plan and parts of other IDR plans. As a result, IDR and online consolidation applications became temporarily unavailable.

The legal challenges to the SAVE Plan have been ongoing, with the following key dates:

August 2023: The SAVE Plan officially launched, replacing the REPAYE Plan. Borrowers could enroll to access lower monthly payments and interest protections.
October 2023: Major elements of the SAVE Plan took effect, including an increased income exemption and a stoppage of unpaid interest growth for qualified borrowers.
March 2024: Multiple Republican-led states challenged the SAVE Plan, arguing overreach of executive authority.
July 2024: A preliminary injunction via a federal court blocked full implementation in July 2024.
August 2024: The Supreme Court declined to fast-track an appeal, meaning the SAVE Plan remained blocked while litigation continued.
February 2025: The 8th U.S. Circuit Court of Appeals upheld the injunction, citing concerns over the Education Department’s authority and potential financial impacts on states.

The online IDR application is available again (as of March 26, 2025). Borrowers can still apply for Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) plans. Loan consolidation is also available.

What Happens to Borrowers Enrolled in the SAVE Plan?

Borrowers on the SAVE Plan are directly impacted by these legal battles. Currently, SAVE Plan participants are placed into administrative forbearance; they’re not legally required to make monthly payments, and the interest on their loans won’t accrue. For those on a tight budget, that can be helpful.

That said, forbearance isn’t forgiveness, and months spent in forbearance don’t count toward loan forgiveness programs like the Public Service Loan Forgiveness (PSLF) or traditional income-driven repayment forgiveness. The U.S. Department of Education expects this pause to continue until at least December 2025, unless court rulings change the situation.

If you’re a borrower in forbearance, stay up to date on the status of your loans. Ensure your loan servicer has your up-to-date contact information, and check in with studentaid.gov for the latest student loan news.

How Are Loan Forgiveness Options Affected?

The SAVE Plan block greatly impacts loan forgiveness paths, including PSLF. Because enrolled borrowers are now in administrative forbearance, the months they spend without making payments don’t count toward the 120 qualifying payments for PSLF or the 20 to 25 years necessary for IDR forgiveness. That pause could delay borrowers’ progress unless future policy changes address the gap.

SAVE Plan borrowers may want to explore alternative IDR plans like PAYE or IBR to stay on track toward PSLF or IDR forgiveness. Alternatively, if you’ve already completed 120 months of qualifying employment, the PSLF Buyback program lets you “buy back” certain months spent in forbearance, helping you stay on track toward loan forgiveness.

Knowing what other repayment options are available can make a world of difference when managing student debt.

What Will Happen to Other Income-Driven Repayment Plans?

Given the news about the SAVE Plan, many borrowers might have concerns about other income-driven repayment options. As previously noted, the U.S. Department of Education has reopened applications for certain IDR plans, including IBR, PAYE, and ICR, as of March 26, 2025. Borrowers can now apply for or recertify these student loan repayment plans through the online application.

However, the broader political climate around student loan reform suggests changes might be on the horizon. Future administrations or legislative actions could aim to retool or modernize IDR plans, especially if the SAVE Plan remains permanently blocked.

Borrowers can prepare for any future changes by making proactive decisions:

Stay enrolled in current IDR plans and continue making qualifying payments.
Monitor official updates from the Department of Education for any policy changes.
Explore alternatives if you’re nearing forgiveness milestones or need to adjust your payment strategy.
Consult your loan servicer when uncertain about your plan’s status or your next steps.

The biggest takeaway for any student loan borrower is to keep up with student loan news over the coming months, especially as the state of repayment and forgiveness programs continues to change.

Considerations for Future Borrowers

While following student loan news is important for current borrowers, it’s just as critical for future borrowers, students, and parents to stay up to date. Future college students should think carefully about how they will finance their education. The uncertainty of programs like the SAVE Plan and potential reforms to other IDR plans highlights why incoming students should prioritize grants, scholarships, and other financial aid whenever possible and consider the return on investment of their chosen degree.

Completing the Free Application for Federal Student Aid (FAFSA) is a key step to financing education, even in the face of changes to federal loan programs. The FAFSA gauges loan eligibility and is often the only way to qualify for need-based Pell Grants, work-study jobs, and campus aid. Complete the FAFSA as early as possible to avoid missing out on potential aid opportunities.

And before you take out student loans, use tools like our College Degree ROI Calculator to help estimate the average annual cost of a degree against the first-year salaries in your chosen field.

Ascent Is Here to Help

Understanding student loan repayment can help you avoid financial headaches, but it’s easy to feel overwhelmed by ongoing changes and shifting policy updates. Ascent is here to help.

In addition to our variety of private student loans, we have a library of student success resources to support students and their families in college—and beyond. Plus, when you’re ready to jump-start your dream career, our AscentUP program can provide professional development training and coaching to help you build confidence and develop the skills you need for your next chapter.

Check out our blog for more resources and information surrounding education, student loans, and financial wellness today.

FAQs

What happens now that the SAVE plan is blocked?

Borrowers currently enrolled in the SAVE Plan have been placed in administrative forbearance. During this time, monthly payments are not required, and interest does not accrue. Borrowers should keep in mind that months spent in forbearance don’t count toward forgiveness programs, which might prolong the process of paying off your loans or having them forgiven.

Why was the SAVE plan blocked?

The SAVE Plan faced many legal challenges from Republican-led states, which argued that the Department of Education exceeded its authority in creating the program without congressional approval. On February 18, 2025, the 8th U.S. Circuit Court of Appeals upheld a preliminary injunction against the SAVE Plan, agreeing with the states that the plan’s provisions—particularly those related to loan forgiveness—went beyond the Department of Education’s statutory authority.

Is there any chance the SAVE plan will be reinstated?

Given the current political climate and other actions taken by the Trump administration, it’s unlikely that the SAVE Plan will be reinstated anytime soon.

Can I still apply for income-driven repayment (IDR) plans like PAYE or IBR?

Yes, you can still apply for certain income-driven repayment (IDR) plans like Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Following a temporary suspension due to a court injunction in February 2025, the U.S. Department of Education reopened applications for these plans on March 26, 2025.

Can private loans offer similar terms to what SAVE would’ve provided?

Most private student loans do not offer the same payment structures or forgiveness options as federal programs like SAVE. That said, some private lenders offer forbearance or income-based options. Carefully compare terms before you refinance or choose a private student loan provider.