SAVE borrowers, don't despair just yet. The fight for lower monthly payments and student loan forgiveness continues, despite this week's latest setback.
The Supreme Court made it known this week that it would not interfere in approving the Department of Education's emergency request to reinstate the Saving on a Valuable Education Plan. This move was anticipated by experts, who did not expect the highest federal court to review the case before it was finalized by the federal appeals courts.
This doesn't mean SAVE is permanently blocked. It also doesn't mean that the highest court ruled against the Biden-Harris administration's repayment plan.
"This isn't a final verdict on SAVE. There is a process that needs to be followed when working within the federal court system," said Elaine Rubin, a CNET Money Expert Review Board member and student loan expert. "The Supreme Court did not see it as their place to step in at this time."
For now, payments remain on hold for SAVE borrowers and this matter will continue to play out in the lower courts. Expect the legal process to take several months, possibly even a year, Mark Kantrowitz, a financial aid expert, told CNET.
What should you do if you're a borrower embroiled in the back-and-forth over the legality of SAVE? Waiting it out is the best advice for most borrowers, but there are some steps you can take in the meantime.
Read more: My Student Loan Payments Are Paused Due to SAVE's Legal Challenges
1. Prepare now in case SAVE is shut down
Although Kantrowitz told CNET that the SAVE plan is more legally sound than the Biden-Harris administration's first attempt at widespread forgiveness, it's not inevitable that the repayment plan will survive the courts.
It's a good idea to plan in case SAVE is struck down. Rubin suggests using free tools, like StudentAid.gov's online loan simulators, to help you understand what your new monthly payments would be under different income-driven repayment plans. If your monthly payment would increase with a different plan, try to incorporate the larger payment into your budget now, if it's possible.
You can even pay yourself your student loan payment, if you can afford it, by depositing it into a high-yield savings account to earn interest during the payment pause.
2. Don't expect payment credit during the pause
Unlike during the pandemic, each month that payments remain paused won't count toward your total forgiveness goal. Let's say you're three months away from forgiveness. If SAVE is reinstated three months from now, your debt won't be immediately wiped away. Instead, you'll need to make three more monthly payments before you'll be eligible for debt relief.
3. Certain borrowers may want to switch payment plans
If you're close to receiving forgiveness through the Public Service Loan Forgiveness plan or if you've been repaying your student loans for 20-25 years, switching to a different income-driven repayment plan could help you receive forgiveness sooner.
There's just one small hiccup, Rubin noted. The electronic application to switch repayment plans is currently down. You can still switch plans, but to do so you'll need to download and fill out the PDF application the old-fashioned way. You can then send it to your loan servicer electronically or via mail.
If you switch payment plans, your monthly payments will resume. Since SAVE is the most affordable income-driven repayment plan option for most borrowers, expect your monthly payments to increase.
Experts say SAVE borrowers who aren't eligible for forgiveness in the next couple of months through other programs should wait it out until the final verdict on the plan is clear.
4. Stay dialed in so you can react quickly
It feels like every week, there's a new update on the SAVE repayment plan. While the noise is likely to continue, it's still important to stay informed on what's happening.
Rubin recommends keeping an eye on student loan news so you'll know right away if changes are made to SAVE. The Department of Education and your servicers will contact you directly if any changes are made to your plan, but it's still a good idea to pay attention to the court rulings so you can plan your next steps.
