Education Department Tells 7.5 Million Student Loan Borrowers in "Illegal" SAVE Plan to Prepare for Repayment More than 7 million student loan borrowers enrolled in the SAVE repayment plan will receive notices starting Friday, instructing them to transition to a new repayment plan, the Education Department announced. The SAVE plan, which was invalidated by a federal court earlier this month, has been in forbearance since July 2024 as legal challenges unfolded. Starting July 1, loan servicers will begin sending borrowers notices giving them 90 days to select an alternative repayment plan. The available options will likely result in higher monthly payments for most borrowers. The Education Department described the SAVE plan as "illegal," stating it was based on "the false promise of student loan forgiveness and artificially low monthly payments." Under Secretary of Education Nicholas Kent emphasized in a statement that the Biden administration’s approach to student debt relief was being "put to rest," asserting that borrowers must "pay back loans they took out." The department’s guidance, which will be sent to all borrowers enrolled in the defunct plan, aims to end what Kent called the "illegal student loan bailout agenda." Borrowers enrolled in the SAVE plan have faced uncertainty as legal battles progressed. While the plan was in effect, they were not required to make payments, but interest on their loans began accruing after a court blocked its implementation last summer. This has led to increased debt balances for some students. Alexis Arredondo, a first-generation college graduate with $40,000 in student debt, described the situation as a "very difficult" choice between higher monthly payments or a longer repayment period that would result in more interest.#save_plan #nicholas_kent #education_department #repayment_assistance_plan #student_borrower_protection_center
