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VIN Foundation | Supporting veterinarians to cultivate a healthy animal community | prevet resources veterinary student resources veterinarian resources | Nonprofit free veterinary resources | Blog | What do the recent court rulings on SAVE mean for you?

What do the recent court rulings on SAVE mean for you?

Two federal district courts recently ruled on the SAVE student loan repayment plan

Last week, two courts blocked two aspects of the new Saving on a Valuable Education (SAVE) student loan repayment plan. SAVE falls into the category of income-driven repayment (IDR) plans where a borrower’s income is used to calculate their minimum monthly payment. Student loan borrowers enrolled in IDR plans make a certain number of payments, and any remaining balance is forgiven. The forgiven amount can be treated as taxable income. The recently released SAVE plan is one of the most generous of the IDRs with low minimum monthly payments and a 100% unpaid interest subsidy covering any monthly interest not covered by monthly payments.

A Kansas federal district court blocked portions of the SAVE plan due to take effect July 1, 2024. This ruling was subsequently overturned on appeal as of June 30, 2024, which means the Department of Education (ED) can proceed with most of SAVE’s final rules pending a final decision by the court.

A separate ruling from a Missouri federal district court blocked forgiveness from being granted under the new SAVE plan until the court can rule on the “merits of the case.” There are numerous paths to student loan forgiveness outlined in the final rules for SAVE, providing forgiveness in as little as 10 years for undergraduate borrowers, and up to 25 years for graduate school borrowers. The court is questioning whether or not the Department of Education has express authority from Congress to forgive student loans under the SAVE plan, particularly the early cancellation provisions that allow relatively low balances to be forgiven in less than 20 or 25 years. While the SAVE forgiveness provisions were created similar to those for Income-Contingent Repayment (ICR), Pay as you earn (PAYE), and Revised PAYE, the current ruling only calls into question forgiveness granted under SAVE. This ruling has also been appealed, but the ED cannot continue to forgive balances under SAVE’s early forgiveness provisions.

What do the rulings mean for anyone using SAVE right now?

Nothing… yet.

If you’re using SAVE, you will continue receiving IDR and/or Public Service Loan Forgiveness (PSLF) credit for on-time, minimum monthly payments.

Since we’re also still in the one-time IDR payment count adjustment period, any time spent in repayment under any available repayment plan, including SAVE, counts toward forgiveness. For those who haven’t already received forgiveness or will not by the time their count adjustment is applied (by September 1), it’s unclear if you could be granted forgiveness using SAVE after the count adjustment period is over. 

Yes, this could be a big deal and the sooner we see a final ruling on this forgiveness provision, the better. However, don’t panic. While it’s crucial to stay informed and act when necessary, this is also not a time to voluntarily pay more than is required by switching to another plan or forgoing SAVE before we know the outcome of this case.

In the meantime, you can (and should) continue to use SAVE if it provides you with the lowest monthly payment and covers a significant amount of your monthly interest via the 100% unpaid interest subsidy. 

If you want to apply for SAVE right now, you’ll have to submit a paper application per the instructions on studentaid.gov.

Whether or not you should continue to use SAVE long-term to reach forgiveness will depend on how the court decides on the merits of this case, updated guidance from the Department of Education, your income-driven repayment plan eligibility, or additional legislation. This continues to be a very confusing and uncertain time for student loan borrowers. Stay tuned for updates and ask questions. We’re here to help!

If you need student debt help, reach out to VIN and VIN Foundation. We have free online tools like the VIN Foundation Student Debt Center and special message board areas to help you make sense of your options. If you have questions on any of the available tools and options, reach out to studentdebt@vinfoundation.org.

VIN Foundation | Supporting veterinarians to cultivate a healthy animal community | Our Team | Student Debt Consultant | Tony Bartels, DVM, MBA
Tony Bartels, DVM, MBA

Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.

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