Education Department faces legal pressure over SAVE repayment-plan transition

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Darina Pashchenko

1 hour ago

Education Department faces legal pressure over SAVE repayment-plan transition — SAVE plan in limbo

Millions of student-loan borrowers remain in limbo as the U.S. Education Department extends deadlines to move them off the Biden-era SAVE repayment plan. A new court filing seeks a clearer timeline after some borrowers passed both their original 90-day window and a subsequent 30-day extension without being shifted to new payment terms.

Highlights

Public Goods Practice filed a legal motion demanding the Education Department clarify its timeline for transitioning borrowers from the SAVE plan after extended notification periods.
The Department's counsel admitted uncertainty on when borrowers whose 30-day transition deadline had expired would be transferred to new, potentially higher-payment plans.
With 7.5 million borrowers in SAVE, ambiguity over new repayment obligations and possible shifts to the Repayment Assistance Plan exposes many to higher payments and enforcement penalties.

Legal challenge focuses on transition timeline

As first reported by Business Insider, Public Goods Practice on Monday filed a request for information in its ongoing lawsuit over the suspension of benefits tied to the SAVE plan, asking the Education Department to explain what happens next for affected borrowers.

The filing centers on borrowers who began receiving department notices in July telling them they had 90 days to select a new repayment option or be automatically placed on the standard plan, which carries higher monthly payments. After some borrowers reached that deadline, the department sent what it described as a final notice giving them an additional 30 days to transition.

According to the legal filing, when Public Goods Practice asked the department's counsel when borrowers whose 30-day period had expired would be moved to new plans, counsel said it did not know when that transfer would happen. The Education Department does not respond to repeated requests for comment on the timing, while the law firm continues to press to prevent involuntary transfers from SAVE.

Borrowers face higher-payment risks

The uncertainty comes as the Trump administration reshapes the federal student-loan repayment system and promotes a new Repayment Assistance Plan, or RAP. Borrowers say RAP can lead to higher monthly bills than SAVE, increasing concern about affordability once forbearance ends.

Those concerns are amplified by the penalties tied to missed payments, including potential wage garnishment and the seizure of federal benefits. With 7.5 million borrowers enrolled in SAVE, the unresolved timeline leaves a large group without clear guidance on when new payment obligations begin or which repayment structure they will ultimately enter.

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