Millions of SAVE Borrowers In Limbo as Student Loan Collections Resume

Millions of student borrowers protected by Biden-era policies remain in limbo regarding their loans as the Trump administration ramps up efforts to claw back unpaid education debts.

Announced last week, the U.S. Department of Education is reinstating forced collections on unpaid loans for borrowers who are in default. But some borrowers, namely those who signed up for former President Joe Biden's Saving on a Valuable Education (SAVE) plan—which provides borrowers with more affordable payments and student loan forgiveness after two decades of repayments, or in some cases as little as 10 years—face an uncertain future when it comes to their repayments.

Under Biden's SAVE plan, approximately 8 million enrollees are exempt from the May 5 deadline to select a payment plan and arrange their repayments. Lawsuits brought by Republican-led states prompted the Education Department to temporarily halt the plan in July 2024.

In the meantime, student loan servicers have placed SAVE borrowers in an interest-free forbearance as the legal proceedings continue. It is expected that repayments for these millions of borrowers will not begin until at least December 2025, according to a release made by the Biden administration in January.

The situation, along with the confirmation that the Trump administration will begin pre-pandemic collections, has caused further unease among those enrolled in SAVE who have spoken to Newsweek.

Alex Perryman is a Virginia native who took out a $20,500 federal loan to help with the cost of studying a masters degree at the University of Edinburgh in Scotland. When she graduated, she signed up for the SAVE plan and has not been required to make any payments since, nor has she accrued any interest on her outstanding balance.

She said the promise of forgiveness from the Biden administration means she hasn't made any voluntary repayments since she graduated with her international relations degree in 2021, and while she is working and earning currently, she doesn't feel prepared to start making repayments.

If the SAVE plan is struck down in the courts, Perryman said she would sign up for an income-driven repayment plan. While she knows that repayments will always be in the cards at some point, she does not know how much she would be required to pay back per month—whether SAVE is saved or overturned—which has prompted worries over how eventual repayments may impact her finances.

"While I am concerned about my monthly budget, I knew that I would need to start repaying the loan eventually," she said. "I don't want it to be misconstrued that people like me just assumed we would never have to start paying the loan back. That is quite literally the definition of a 'loan'."

Perryman said the "complete lack of communication" from the Education Department hasn't helped ease worries.

"I don't feel that I can prepare for the repayment because there has been next to no communication from either the Department of Education or my student loan servicer," she said. "I have no idea how much I'll be expected to repay, so I cannot begin to budget or save for those repayments."

"If we are expected to start paying back our loans, I think it's only fair to know when those repayments will start and how much we are expected to pay per month."

Amanda, whose name has been changed, is from Santa Maria in California and now lives in the U.K. In 2023, she took out $60,000 for her master's degree in creative writing.

"I have been deferred a few times on the basis that I do not currently live in the country," she told Newsweek. "But I signed up for the SAVE plan under Biden in case I moved back."

She said the prospect of making repayments isn't financially feasible for her at the moment, meaning she is unlikely to return home to the U.S. if the SAVE plan is struck down.

"I am managing fine where I am but can't risk going back to the USA because I know I will be in serious debt," she told Newsweek.

Like Perryman, she does not know how much her monthly payments would be and has not received any official communication from the Education Department or her loan servicer.

"It feels that there will be no way back home for the foreseeable future," she said.

The Trump administration's pushback on Biden student debt policies also makes it unlikely that these debtors can achieve forgiveness—something borrowers told Newsweek they have been anticipating through SAVE.

Perryman said she considered making some repayments while being in forbearance but "thought it would be a more prudent financial decision to work towards increasing personal savings" instead, as she "did not want to work to pay it off only to then find out I was forgiven."

Will SAVE Be Saved?

Unfortunately for those enrolled in Biden's plan, it is looking increasingly unlikely under the current administration that SAVE will survive.

The Republican states that have brought action to bring SAVE down contend Biden's plans were unlawful overstep, going beyond the authority granted by Congress when it first established income-driven repayment plans in 1993. They believe SAVE essentially functioned as a covert, large-scale student loan forgiveness program.

In response, the Biden administration argued that Congress had granted the Department of Education broad discretion to create regulations for income-driven repayment plans and that the SAVE plan is well within those boundaries set by Congress.

If the courts do strike the plan down, borrowers will need to select other repayment plan options to settle their debts. This is likely to lead to higher repayments than anticipated for those currently enrolled in SAVE.

Are you a borrower currently in default or delinquent on your loans who is worried about the upcoming May 5 deadline? Email a.higham@newsweek.com