How do I navigate the SAVE forbearance?

  • Updated

Due to the ongoing court actions against the Saving on a Valuable Education (SAVE) repayment plan, the Department of Education will no longer accept enrollment into SAVE, and servicers cannot charge borrowers enrolled in SAVE. If you are currently  enrolled in SAVE and  wondering what you should do, if anything, while in  administrative forbearance, Summer can help you navigate your options depending on your priorities.

 

4 Takeaways on the SAVE Administrative Forbearance

  1. No payments are required: You are not obligated to make payments on your loans during this administrative forbearance.
  2. No interest accrual: Interest on your federal student loans is temporarily paused.
  3. Length of forbearance is unknown: There’s no definitive end date on this administrative forbearance. The Department of Education has generally indicated that the forbearance will end once servicers can accurately calculate monthly payments or the court has decided on the availability of the SAVE plan.
  4. Time doesn’t count toward forgiveness: Whether pursuing Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) forgiveness, months spent in the SAVE forbearance will not count. 

 

Identifying Your Situation and Potential Next Steps

The benefit of the SAVE forbearance is you currently have no payments on the loans enrolled in SAVE, nor are those loans accruing interest. This can provide  immediate relief and helps with short-term cash flow. 

Your best path forward will depend on your overall priorities and goals for your student loans. 

Borrowers Pursuing Public Service Loan Forgiveness (PSLF)

If you are working an average of 30 hours or more per week for a qualifying public service employer and actively working toward the required 120 qualifying payments needed for PSLF, your forgiveness date is effectively being pushed back because every month spent in this forbearance does not count toward PSLF. 

Paths to consider:

  1. Stay in the SAVE forbearance: Time in this administrative forbearance means you aren’t accruing interest, nor are you obligated to make payments on your loans. If you aren’t close to the required 120 qualifying payments needed to be eligible for forgiveness, remaining in this forbearance may be a compelling option for short-term relief. Bear in mind that your forgiveness will be delayed by the amount of time you remain in this forbearance. 
  2. Switch to an available, PSLF-eligible repayment plan: Enrolling your loans into any of the available and eligible repayment plans will resume your progress toward forgiveness. 
    1. Once you exit the SAVE plan, you won’t have access to enroll again since the Department isn’t accepting new enrollments.
    2. Due to a major processing backlog, servicers may take 2+ months to process IDR applications, so PSLF progress may not resume immediately. 
  3. Pursue PSLF Buyback: Borrowers pursuing PSLF who have already been confirmed as having 120 months of qualifying employment can buy back months in forbearance or deferment, which would result in forgiveness under PSLF. If you’re approved for buyback, you’ll make a lump sum payment equivalent to what your IDR payment would have been if you weren’t in deferment or forbearance. Nearly any deferment or forbearance that doesn’t already count toward PSLF can qualify for buyback. 
    1. There isn’t an established time frame for processing buyback and the Department has been very slow so you may be waiting for some time. 
    2. Technically, you have 90 days from the date you receive the agreement to make your payment. However, it may be difficult to make multiple months’ worth of payments in a short time frame. 
    3. When you’re ready for buyback, you must provide specific language with your request which you can find on studentaid.gov. 
    4. If you haven’t already reached 120 qualifying eligible employment months, switching repayment plans now will enable you to make current qualifying payments instead of relying on buyback for the future months. 

Borrowers Pursuing Income-Driven Repayment (IDR) Forgiveness

If you are looking to pursue IDR forgiveness, you will need to switch into an available IDR plan to resume progress payments towards the 20/25 year forgiveness timeline. 

Things to consider:

  • Depending on your loan situation, there are three other repayment plans you may be eligible to enroll in: Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR). Your payment is likely to be higher under these available IDR plans than under the SAVE plan.
  • If you’re close to the 20 or 25 year repayment term, consider enrolling in IBR. Due to legal challenges, the Department isn’t processing forgiveness under the PAYE or ICR plans. 
  • If you’re not close to the 20 or 25 repayment term, consider enrolling in PAYE or ICR which may have a more affordable monthly payment amount. Once you’re closer to the 20 or 25 year repayment term, you’ll need to switch to IBR to receive forgiveness.  
  • Due to a major processing backlog, servicers may take 2+ months to process IDR applications, so IDR forgiveness progress may not resume immediately. 
  • Once you exit the SAVE plan, you won’t have access to enroll again since the Department isn’t accepting new enrollments.

Borrowers Not Pursuing Loan Forgiveness

If you aren’t pursuing loan forgiveness, the SAVE forbearance can be helpful with maximizing short-term cash flow. Since interest isn’t accruing, you can make payments to lower your principal loan balance. 

If you would like to pay off your loans faster, the Standard repayment plan may be the best option to pursue. However, it will often have a higher monthly payment than the IDR plans.