The SAVE plan was created in 2023 as the most affordable student loan repayment option, but a legal challenge led by the state of Missouri has resulted in the plan being temporarily blocked. On December 9, 2025, the Department of Education announced that it agreed to a settlement to end the case, and filed a motion asking for the case to be resolved with an order that the SAVE rules must largely be vacated. This article covers what student loan borrowers – especially the 7 million people enrolled in the SAVE plan – need to know about likely changes coming to the SAVE plan.
Overview
- What does the settlement say?
- Is the settlement final?
- Can I still sign up for the SAVE plan?
- What if I’m already on the SAVE Plan?
- If I’m not enrolled in SAVE and not trying to enroll in SAVE, does this settlement impact me?
- More Information about the SAVE forbearance
- What about the PSLF “buyback” process?
What does the settlement say?
In the settlement, the Department of Education agrees to the following terms:
- The Department will not permit anyone else to enroll in SAVE (or the plan that SAVE replaced, called REPAYE), and it will deny any pending applications for SAVE.
- The Department will work to move borrowers already enrolled in SAVE out of SAVE and into a different repayment plan.
- The Department will not forgive any loans through the SAVE Plan (or through the plan that SAVE replaced, called REPAYE).
- The Department will not implement any provisions of the 2023 repayment rules that created the SAVE plan with one exception: it will implement a provision that allows certain types of deferments and forbearances to count as qualifying time toward loan forgiveness in income-driven repayment plans. This provision is 34 C.F.R. § 685.209(k)(4)(iv).
- The rest of the 2023 repayment regulations, including the SAVE plan, will be vacated, and the Department will conduct a negotiated rulemaking to formally repeal the rules and make further changes to the rules that may be needed.
- For the next 10 years, any time that the Department plans to cancel or forgive more than $10 billion in federal student loans within a one-month period, the Department will notify Missouri.
Is the settlement final?
No. The Department has said that it will not implement the settlement agreement until it is approved by the court. The settlement has been submitted to the court, but as of December 12, the court has not yet acted or set a schedule for when it will.
Can I still sign up for the SAVE plan?
No. The Department of Education stopped allowing borrowers to sign up for the SAVE plan in the Spring of 2025, and under the settlement, the Department would not permit any more borrowers to enroll in SAVE.
What if I’m already on the SAVE Plan?
You likely will not be able to stay in the SAVE plan for long and will likely start receiving student loan bills soon.
Under the settlement, the Department agrees to work to move all of the borrowers currently in the SAVE plan out and into a different repayment plan. The settlement does not say how soon borrowers will have to move out of the SAVE plan. In its press release, the Department of Education said that borrowers in SAVE will have “a limited time” to select a new repayment plan. The Department has not said what repayment plan the Department will move borrowers into if they do not select a new repayment plan.
Borrowers should expect that when they select a new repayment plan — or are switched into a new repayment plan if they do not select one themselves — they will begin receiving monthly student loan bills again and will be expected to make payments. Since summer 2024, borrowers enrolled in the SAVE plan have been in a forbearance, meaning they have not been billed or required to make payments. That forbearance will likely come to an end soon. However, after the SAVE forbearance ends, you can request a temporary forbearance to postpone payments while you consider your repayment options and potentially rework your budget.
Borrowers currently enrolled in SAVE do not have to wait to switch plans. If you are currently in SAVE, you should consider learning more about other repayment options, using the Loan Simulator to estimate your payments in other plans, and potentially applying for a new repayment plan.
But be forewarned – SAVE was the most affordable repayment plan, and your last payments in SAVE were likely based on your income from two or more years ago. Your new payments will most likely be higher in whatever plan you switch to, both because other plans are more expensive than SAVE and because your payments will likely be based on more recent income, which may have gone up. You may want to give yourself some time to rework your budget and consider all of your options before diving into a new plan.
For the most up-to-date information, borrowers should visit the Department of Education’s website.
If I’m not enrolled in SAVE and not trying to enroll in SAVE, does this settlement impact me?
It might. In addition to agreeing not to use the SAVE plan, the settlement also agrees not to implement most of the rest of the changes to the repayment rules made in 2023 – some of which were big improvements for borrowers in all income-driven repayment plans, not just SAVE. For example, as a result of this settlement:
- Borrowers who consolidate their loans now are likely to lose all credit for any time they have already earned towards IDR forgiveness for making payments on their loans prior to consolidating. That means borrowers who consolidate their loans may have to spend more years in repayment as a result of this settlement. (This should not impact borrowers who previously consolidated their loans.)
- Enrolling and staying enrolled in IDR will be more burdensome. The 2023 rules allowed borrowers to agree to data-matching to simplify enrolling and staying enrolled in IDR by allowing the Department of Education to access their income information from their tax filings to set income-driven repayment (IDR) payments, so that borrowers do not have to reapply and submit documentation of their income every year for IDR The settlement would prevent that, and force borrowers to jump through more hoops to manage repayment. The 2023 rules also aimed to reduce defaults by providing for automatic enrollment in IDR for borrowers who fall behind on higher, standard payment amounts; the settlement blocks that as well.
- Borrowers who were steered into forbearances or repayment plans that don’t count towards IDR forgiveness will not be able to “buy back” that past time they missed out on by making additional payments to cover those prior months in nonqualifying status. Note that the settlement does not impact the separate PSLF rules, which will continue to allow borrowers to “buy back” time for purposes of PSLF forgiveness only.
More Information about the SAVE forbearance:
What is the SAVE forbearance?
Borrowers enrolled in the SAVE plan have been placed in a forbearance—meaning borrowers in SAVE are not currently required to make payments. But the Department has started charging interest on these loans again, since August 1, 2025, so borrowers in the SAVE forbearance will see their student loan balances increase the longer they stay in the SAVE forbearance.
Additionally, the months spent in the SAVE forbearance do not count towards IDR or Public Service Loan Forgiveness (PSLF), meaning borrowers are missing out on making progress toward becoming debt-free in those programs.
And the SAVE forbearance is likely to come to an end soon, with borrowers required to switch into other plans, after the litigation concludes.
I’ve met the number of payments for IDR cancellation. Can I still have my loans canceled while I’m in the SAVE forbearance?
No. As a result of the litigation, the Department stopped providing IDR cancellation to borrowers enrolled in the SAVE plan, even if they have met the required number of qualifying payments. And in the settlement, the Department agrees not to cancel loans through the SAVE plan. Borrowers in SAVE who have 25 years of qualifying payments (300 months) should consider requesting to switch to the IBR or ICR plans, as they will be eligible to have their loans cancelled in IBR or ICR now. This is particularly important for borrowers who reach 300 months before the end of 2025 because loans cancelled through 2025 will be protected from federal tax consequences. Loans cancelled through IDR after 2025 may be treated as “income” and subject to income taxes.
Note: In October 2025, a court ordered that the Department treat any borrower enrolled in SAVE who reaches 300 months of qualifying IDR payments before the end of 2025 AND who applies to switch to IBR or ICR before the end of 2025 as having qualified for loan cancellation in 2025. This should protect the borrower from having to pay federal taxes on their cancelled debt. If the borrower waits until after 2025 is over, any debt they have cancelled through IDR may be treated as taxable income. Therefore, borrowers in SAVE who have 300 months (25 years) of qualifying IDR payments should strongly consider applying to switch to IBR or ICR before December 31, 2025.
Should I switch out of the SAVE plan now or wait until it’s eliminated?
It depends on your goals, but you might not have long before it is eliminated regardless.
If you want to get your loans cancelled through Public Service Loan Forgiveness (PSLF) or IDR, it’s important to know that time spent in the SAVE forbearance does not count as qualifying time toward the 10 years in repayment required for PSLF or toward the 20 to 30 years in repayment required for IDR cancellation. Additionally, borrowers cannot make qualifying payments toward IDR or PSLF cancellation while they are in the SAVE plan.
Instead, borrowers who want to continue making progress in IDR or PSLF should consider switching to a different IDR plan, such as IBR, where they can continue earning credit toward IDR or PSLF cancellation. While some borrowers will face higher payments in IBR, PAYE, or ICR, some borrowers who are eligible for $0 payments in SAVE will also be eligible for $0 payments in IBR, PAYE, or ICR. It is worth using the Loan Simulator to check if you are eligible for a $0 payment in other plans and, if not, whether the payments in another plan are affordable to you.
If you can’t afford payments in another plan right now, or need to focus your money on another financial goal (such as paying off a higher interest debt), then it might be fine to leave your loan in the SAVE forbearance for now. Just realize that you might not have much longer before you are forced out of SAVE and into another plan where you’ll have to make payments again. And if you don’t request to switch plans and the Department forces you out of SAVE, it may not switch you to the best plan for you. Additionally, so long as you are in the SAVE forbearance, your balance will go up with interest and you won’t be making progress toward being student-debt free.
What about the PSLF “buyback” process?
There is another option for borrowers in the SAVE forbearance who want to continue earning credit towards PSLF. Some borrowers have been able to get credit toward PSLF forgiveness for time in the SAVE forbearance through the PSLF “buyback” process. The PSLF rules allow borrowers to “buy back” past months that did not count towards PSLF by paying the amounts that they would have needed to pay under an IDR plan during those months. But right now, the buyback process is only available to borrowers who already have 10 years of qualifying employment and will be eligible for cancellation through PSLF now if their past months in forbearance are counted. Borrowers earlier on in their PLSF journey cannot yet use the buyback process.
Also, while some borrowers have reported that the Department allowed them to “buy back” months in the SAVE forbearance by making a lump sum payment for those months based on the same monthly rate that they were paying in SAVE before the forbearance started, the Department may not continue to calculate buyback payments that way. The Department has said this way of calculating buyback rates only applies if the forbearance was less than a year. But the SAVE forbearance has now been going on for over a year. It is therefore unclear how the Department will calculate how much borrowers will owe under the buyback process for months the borrower was in the SAVE forbearance going forward.
For more background about the history of the SAVE plan and the lawsuits surrounding it, see our previous blog posts on this issue.
