Some Income Driven Repayments Plans To Open, SAVE Plan Still Blocked
According to multiple reports, the U.S. Department of Education will soon reopen applications for particular income-driven repayment plans, ending a freeze that left millions of student loan borrowers in limbo. However, not all IDR options will be available — notably, the Biden-era SAVE plan (and its predecessor REPAYE) remain off-limits amid a court injunction, two sources familiar with the administration’s plans told Yahoo Finance . Borrowers may be forced into older, less generous plans, potentially leading to higher monthly payments and lost savings. While the reopening of the IDR portal is welcome news, the limited options could increase costs for borrowers and create confusion, especially with the temporary removal of the online tool that identified the lowest-cost plan for borrowers.
Income Driven Repayment Application Portal To Reopen Within Two Weeks, But Not For SAVE Plan
After a sudden halt in late February, the Education Department is preparing to resume processing IDR plan applications in the coming weeks, as soon as March 26. “Student loan servicers have been told to resume processing income-driven repayment applications in about two weeks,” Yahoo Finance reported on March 25, citing sources. This move will restore access to some relief options that had been frozen, providing a pathway for borrowers to enroll in specific income-based plans that cap monthly payments based on income and family size. The department shut down online applications for all IDR plans on February 24 in response to a federal court order blocking President Biden’s new SAVE plan. The shutdown also paused enrollments in other IDR programs—even those not directly targeted by the court ruling—because the plans shared a unified application form.
The upcoming reopening will be partial: borrowers will again be able to apply for older IDR plans such as Income-Contingent Repayment, Income-Based Repayment, and Pay As You Earn. Notably absent will be the new SAVE plan (which replaced REPAYE) since it remains blocked by the court injunction. An Education Department spokesperson said officials are working to ensure repayment programs comply with the 8th Circuit’s ruling and anticipate a “revised form allowing borrowers to change repayment plans to be available” soon, according to Reuters.
SAVE Plan And REPAYE Income Driven Repayment Plan Remain Unavailable
The SAVE plan was designed as the most affordable IDR option, offering significantly lower monthly payments (including $0 payments for some low-income borrowers) and faster forgiveness of remaining balances. It effectively took the place of the older REPAYE plan. However, SAVE remains off the table due to a legal challenge by a group of Republican-led states and a court injunction. Following the ruling, the Education Department shuttered IDR applications entirely. It quietly issued a stop-work order to servicers to stop accepting and processing all income-driven repayment and consolidation applications for three months, as an internal memo described.
This blanket freeze went beyond the SAVE plan and stalled older programs that were not part of the lawsuit. “Borrowers have relied on many of these plans for decades and this sudden and reckless action means millions of borrowers have fewer repayment options available and are unsure of what to do,” a group of 25 Senate Democrats wrote in a letter to Education Secretary Linda McMahon, decrying the broad shutdown, as reported by ABC News. They questioned why IDR plans not involved in litigation were removed without warning.
The SAVE plan (and any version of REPAYE) will remain inaccessible until the legal battle is resolved or the department finds a compliant way to offer it. The Education Department has indicated it is exploring an alternative version of SAVE that meets the court’s requirements, but it “does not expect that work to be completed until ‘well into 2025’”, according to the National Association of Student Financial Aid Administrators. In the interim, only the older IDR plans – which have higher payment formulas or less generous interest subsidies – are being reopened for enrollment.
Borrowers May Face Higher Payments Without SAVE Plan
With the most generous plan unavailable (SAVE plan), many borrowers could see higher monthly student loan payments under the remaining options. The four IDR plans were created to ease the burden of student debt, promising reduced payments and eventual forgiveness. “Now, borrowers are left with only the more expensive repayment plans,” as NBC News observes.
In practical terms, losing the SAVE plan’s benefits (such as its interest subsidy, which prevented unpaid interest from accruing) means borrowers will pay more each month and watch their balances grow faster if their payments don’t cover interest.
Borrowers enrolled in the SAVE plan before the injunction have effectively been placed in administrative forbearance since July 2024, preventing their monthly bills from rising. But they, too, face uncertainty and may consider switching to an older plan once available. Advocates note that some borrowers might prefer an older plan if their goal is to pay off loans quicker rather than maximize forgiveness. “For some borrowers, there might be an advantage to enrolling in one of these previously sunset programs,” NASFAA suggested since paying under a higher formula now could eliminate debt faster. Still, the lack of SAVE means higher costs for the majority seeking the lowest payment possible.
In addition to pulling application forms, the Education Department has temporarily removed the online tool that shows borrowers their lowest-cost repayment option. “A feature that automatically selects a plan based on the lowest monthly payment,” will not be available, according to Yahoo Finance.
Ordinarily, when borrowers log into the Federal Student Aid website to compare repayment plans, the system will highlight which plan offers the lowest monthly payment. However, with the cheapest plan (SAVE) unavailable, that feature has been turned off to avoid confusion. Officials have not publicized this change widely, but borrowers have noticed that the platform no longer automatically identifies the plan with the smallest payment.
Until SAVE or equivalent returns, borrowers must manually compare the estimated payments of the available plans to determine which is most affordable for their situation. Some borrowers might unknowingly pick a costlier plan without the guidance of a lowest payment indicator, resulting in higher bills than necessary.
Borrowers can still use the Federal Student Aid Loan Simulator tool to input their income and family information to get estimated payments for each plan. However, the on-hold SAVE plan will not be among those options, and any calculation of PAYE or IBR won’t include SAVE’s interest benefits. The department has advised borrowers that they will be limited to the older IDR programs if they want to change plans now. Until the legal cloud over SAVE is lifted, the more expensive repayment plans are the only game in town – a reality that could push some borrowers to tighten their budgets or seek deferment if payments become unmanageable.
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