After numerous setbacks in his attempt to implement student loan forgiveness, President Joe Biden was dealt yet another blow last month.
On July 18, a federal court issued a stay preventing the U.S. Department of Education from operating its Saving on a Valuable Education (SAVE) plan, which was touted at the time of launch as “the most affordable student loan repayment plan ever.”
It included “many” benefits, the administration said, including driving down monthly payments to $0 for lower-income earners, or those making less than $32,800 per year. (Or $0 for those making less than $67,500 as a family of four.)
The Department of Education also said at the time of implementation that those earning more than that cutoff would save “at least $1,000 per year compared to other (income-driven repayment) plans.”
SAVE also paved the way for eventual student loan forgiveness. Borrows who paid undergraduate loans for 20 years and/or graduate loans for 25 years could have whatever was still owed forgiven after successfully making payments.
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Yet with last month’s ruling, the program has been paused indefinitely and loans have been placed in forbearance. So what does this mean for Delawareans?
What happens during a student loan forbearance?
While loans are in this forbearance, no payment is required and borrowers’ interest rates will be set to 0%. This means no interest will accrue.
Borrowers can continue making payments during this time, however, and they will go toward satisfying their future payments.
How will this affect Public Service Loan Forgiveness or the 20-25 year forgiveness of student loans?
Borrowers using the SAVE plan will not receive credit toward income-driven repayment forgiveness and or public safety loan forgiveness as long as the forbearance is in effect. This means that the clock essentially stops, but will resume once the forbearance is over.
When will I have to start paying my student loans again?
Loan servicing companies have said they don’t have a time estimate for the length of the forbearance, as it’s dependent on court proceedings.
Most will give borrowers notice several weeks (or even months) before payments again resume.
What if I don’t want to be in forbearance with my student loan?
Because SAVE is not the only income-driven repayment plan, borrowers can also choose to have their loans placed in a different repayment plan.
Loan servicers recommend calling to discuss available plans and the process and timeline for enrolling.
Be aware of student loan scams
Scammers may try to contact borrowers claiming they will help get loan discharge, forgiveness, cancellation or debt relief for a fee. But borrowers never have to pay for help with your federal student aid.
Emails that come from the U.S. Department of Education come from: noreply@studentaid.gov, noreply@debtrelief.studentaid.gov, or ed.gov@public.govdelivery.com.
Any questionable messages should be directed to a loan servicer by calling the customer help number on their website.
Got a story tip or idea? Send to Isabel Hughes at ihughes@delawareonline.com. For all things breaking news, follow her on X at @izzihughes_
