The US Department of Education has reopened two student loan repayment plans as its new SAVE plan faces legal challenges. The department emphasizes that borrowers can explore these options while the SAVE program's future is determined.
The U.S. Department of Education announced it was reopening two student loan repayment plans , leaving borrowers with more choices for how to tackle their debt.Here's what borrowers should know about the repayment options. The Education Department made the plans available again while its new repayment program, the Saving on a Valuable Education plan, or SAVE, remains tied up in legal battles. The SAVE plan comes with two key provisions that the lawsuits have targeted.
It has lower monthly payments than any other federal student loan repayment plan, and it leads to quicker debt erasure for those with small balances.While the plan is on hold, the Education Department has put SAVE enrollees in an interest-free forbearance. Having a $0 monthly bill for the time being could be appealing to many borrowers, but there is a downside. To that point, those hoping for loan forgiveness under the income-driven repayment plan's terms or through Public Service Loan Forgiveness aren't getting credit for the months that pass. (PSLF offers debt erasure for certain public servants after 10 years of payments.)'The Department continues to defend in court the authority to cut payments for borrowers with high debts and low incomes through the SAVE Plan,' said U.S. Under Secretary of Education James Kvaal in a statement.'In the meantime, we are making more options available to low-income borrowers, teachers, servicemembers, and other public servants so they can make the best choices for their financial situation.'Some borrowers who are in the SAVE program's interest-free forbearance might want to sit tight, said higher education expert Mark Kantrowitz. Not having to make payments might be a relief to those who are experiencing any financial struggles.And again, months in the forbearance will not bring you any closer to debt forgiveness, he adde
STUDENT LOANS REPAYMENT PLANS SAVE PROGRAM EDUCATION DEPARTMENT DEBT FORGIVENESS