US Education Department Directs SAVE Plan Borrowers to Prepare for Repayment
The U.S. Department of Education has announced that over 7 million student loan borrowers enrolled in the Biden-era SAVE repayment plan must prepare to resume payments. Following a recent federal court ruling that struck down the SAVE plan, borrowers who have been in forbearance since July 2024 will receive notices starting Friday. Loan servicers will provide a 90-day window for individuals to select a new repayment plan, with payments potentially resuming as early as this summer. The available alternative plans generally require higher monthly payments, calculated at a minimum of 10% of discretionary income, compared to the SAVE plan's 5%. This shift reflects the Trump administration's stance against what it terms unlawful loan forgiveness, emphasizing borrower responsibility. Advocacy groups criticize the move, arguing it exacerbates affordability crises for graduates facing economic hardship. Additionally, new regulations eliminate deferment options for unemployment or economic hardship for future loans. Borrowers will be contacted in stages, prioritizing those enrolled in SAVE the longest, forcing many to choose between increased monthly financial burdens or extended repayment periods with higher interest costs.
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US Education Department Directs SAVE Plan Borrowers to Prepare for Repayment
The U.S. Department of Education has announced that over 7 million student loan borrowers enrolled in the Biden-era SAVE repayment plan must prepare to resume payments. Following a recent federal court ruling that struck down the SAVE plan, borrowers who have been in forbearance since July 2024 will receive notices starting Friday. Loan servicers will provide a 90-day window for individuals to select a new repayment plan, with payments potentially resuming as early as this summer. The available alternative plans generally require higher monthly payments, calculated at a minimum of 10% of discretionary income, compared to the SAVE plan's 5%. This shift reflects the Trump administration's stance against what it terms unlawful loan forgiveness, emphasizing borrower responsibility. Advocacy groups criticize the move, arguing it exacerbates affordability crises for graduates facing economic hardship. Additionally, new regulations eliminate deferment options for unemployment or economic hardship for future loans. Borrowers will be contacted in stages, prioritizing those enrolled in SAVE the longest, forcing many to choose between increased monthly financial burdens or extended repayment periods with higher interest costs.
AP News