8 million SAVE Plan borrowers placed in forbearance while courts consider challenge

Houston - If you signed up for the new SAVE Plan to cut your federal student loan payments, you may have received a notice that your loans are now in forbearance.

The U.S. Department of Education says 8 million borrowers in the SAVE Plan have been placed under forbearance while the plan is challenged in court.  

The department says no payments will be due, and no interest will accrue while the loans are in forbearance.

Opponents argue the debt forgiveness program exceeds the Biden Administration’s authority, especially since the U.S. Supreme Court blocked an earlier Biden forgiveness plan.

The Biden Administration has asked the Supreme Court to step in.

Student loan experts say borrowers should use the time to prepare for loan payments to resume when the courts rule.  You may want to prepare to make your previously higher loan payment if the SAVE Plan gets tossed.

If the courts rule the SAVE Plan can go forward, payments for many borrowers will drop to 5% of their discretionary income.

If you meet the requirements for debt cancelation, such as making payments for 10 years for loans under $12,000, the Department of Education will notify you.