Department of Education reveals significant changes in the processing of student loan repayment plans.
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Student Loan Repayments Expected to Stay Paused Under SAVE Plan
The Department of Education seems to have confirmed what many have suspected: it's unlikely that student loan repayments under the SAVE plan will restart soon, if at all, and the program may eventually be canceled.
“Education expects that the entire REPAYE/SAVE program will likely be put on hold,” stated David Bergeron, the acting undersecretary of education, in a statement made last Friday.
This indicates that borrowers with federal student loans who signed up for the SAVE plan and are currently in a forbearance due to the ongoing hold, and who haven't switched to another repayment option, will probably stay in their forbearance for the time being. During this forbearance period, there are no payment obligations and no interest accumulation; however, the time does not count toward loan forgiveness under IDR or Public Service Loan Forgiveness programs. The end date for the forbearance is still uncertain.
Partial Processing Resumes for Borrowers in ICR, IBR, and PAYE Plans
For those federal student loan borrowers who have applied for one of the other income-driven repayment options—ICR, IBR, or PAYE—Acting Under Secretary Bergeron noted that processing is beginning to restart.
“Education instructed its servicers to start moving borrowers who apply for ICR, PAYE, and IBR into their respective plans as quickly as possible,” the statement mentioned. This is supported by at least one loan servicer.
“Processing for IDR has resumed for applications of IBR, PAYE, and ICR for borrowers who file taxes as single or married with no income,” a recent update on MOHELA’s website, one of the Department of Education’s contracted servicers, states. “Other IDR applications will remain on hold for the time being. ”
Full IDR Processing Anticipated for All Borrowers by May
While the processing of IDR applications is gradually increasing, Bergeron indicated that the Department of Education plans to fully resume processing for borrowers seeking ICR, IBR, and PAYE options within a short period.
“Currently, based on what servicers have shared, Education believes that servicers should be ready to resume this by May 10, 2025,” the statement asserts. This will also apply to borrowers in SAVE forbearance who have requested to move to another IDR plan, which may be necessary for those aiming for future loan forgiveness through either IDR or the PSLF program.
“Education anticipates that servicers will begin transferring borrowers already in SAVE who are trying to apply for different IDR plans into their chosen plans by May 10, 2025,” the statement adds.
However, significant delays are likely due to backlogs in applications. Bergeron did not provide any time estimates regarding what borrowers should expect.
The statement goes on to say that "Education does not have a projected date for when the servicers will finish going through the backlog of IDR applications. " This delay is a result of the servicers' methods. In particular, prior to serving.