Two student loan repayment plans have been reopened for registration by the Department of Education (DOE) following a federal court injunction against the Biden administration Saving Valued Education (SAVE) program.
New enrollments in the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plan programs were halted last summer in an effort to phase them out and encourage borrowers to sign up for the Biden-Harris administration's SAVE plan, but now people can sign up again.
"The Department continues to defend in court its authority to cut payments for high-debt, low-income borrowers through the SAVE Plan," US Under Secretary of Education James Kvaal said in a statement. "In the meantime, we're providing more options to low-income borrowers, teachers, service members and other public servants so they can make the best choices for their financial circumstances."
Both repurposed plans offer credit for Public Service Loan Forgiveness (PSLF) and income-based repayment (IDR). Monthly payments are set by borrower income, family size and allow borrowers to obtain forgiveness after an "extended payment period," the DOE said.
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"Many civil servants use it to keep their monthly payments low as they work to earn PSLF after 10 years," said a DOE press release.
While SAVING is tied up in court, borrowers do not owe payments on their loans and the loans do not accrue interest, but they also do not earn credit toward PSLF or make "progress toward satisfying the IDR plan."
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Borrowers in SAVE litigation hold should not consider switching because they are not currently accruing interest, Forbes reports. However, borrowers who are closer to achieving loan forgiveness through PSLF, close to the 120 payment mark or those who qualify for PSLF buybacks may want to consider it, the media said.
New PAYE and ICR registrations will be open until 1 July 2027, DOE said.
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More information for borrowers can be found at DOE website.
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