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Breaking Down the Department of Education’s Guidance for January 15, 2024
I have now written a Part II that you can view HERE.
If you’re a borrower in the SAVE Plan (Saving on a Valuable Education) or exploring your repayment options, there have been significant student loan updates that might impact your strategy.
Understanding these changes can be tricky, but I’m here to break them down for you.
Here’s what you need to know about the recent guidance from the Department of Education and what it means for your student loans.
If you want to stay up-to-date on all future student loan press releases, make sure to subscribe to the K-12 Planning weekly newsletter:
1. Forbearance Extension for SAVE Borrowers
Good news: If you’re enrolled in the SAVE Plan, your first payments likely won’t be due until December 2025.
Why the delay? The Department of Education (ED) and loan servicers need time to update their systems to comply with a recent court injunction. This means:
You’re currently in a general forbearance, meaning no payments are due, and interest isn’t accruing on your loans.
However, this time in forbearance doesn’t count toward Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) forgiveness.
Tip: If you’re pursuing PSLF or IDR forgiveness, you may want to explore switching to another eligible repayment plan to ensure your payments count toward forgiveness. There may be a buy-back option (see below) available in the future.
2. Updated Recertification Deadlines
If you’re on the SAVE Plan, you won’t need to recertify your income until February 2026 at the earliest. If you don't have to recertify until June of each year, then you will have to recertify in June of 2026.
Recertification is the process of updating your loan servicer with your income and family size to adjust your monthly payment. For now:
Borrowers won't have their current status change.
The guidance recommends signing up for the auto-recertification at StudentAid.gov. I’m not so sure about that!
3. IDR Forgiveness: What’s on Hold and What’s Available
Here’s where things get complicated:
Forgiveness under the SAVE, Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) plans is currently blocked due to a court ruling. (This doesn’t apply to PSLF, only the long-term IDR Forgiveness)
However, borrowers can still receive forgiveness under the Income-Based Repayment (IBR) plan.
Here’s the silver lining:
If you switch from SAVE, PAYE, or ICR to IBR, your previous payments will still count toward IDR forgiveness milestones (20 or 25 years of qualifying payments).
4. IDR Applications Are Open Again (Except for SAVE)
If you’re looking to switch repayment plans or consolidate your loans, applications for IDR plans like IBR, PAYE, and ICR are now being processed.
When switching plans, your monthly payment will be recalculated based on your income and family size.
If you’re applying for a new repayment plan, your servicer may place you in a temporary processing forbearance (up to 60 days), during which interest may accrue, but the time will count toward PSLF or IDR forgiveness.
Tip: Applications for SAVE remain paused for now. Subscribe to the newsletter for updates on when processing will resume.
5. PSLF Buyback Program: A Game-Changer for Forgiveness
The PSLF (Public Service Loan Forgiveness) Buyback Program allows eligible borrowers to retroactively claim credit for months spent in deferment or forbearance.
Here’s how it works:
If you’ve completed 120 months of eligible employment, you can “buy back” time spent in non-qualifying statuses.
In the future, this option will expand to allow borrowers to buy back credits before hitting the 120-month mark (though the timeline for this change hasn’t been announced).
Important: If you consolidated your loans, you can only buy back time associated with your current consolidation loan, not the original loans.
6. PSLF Processing Continues
If you’re pursuing PSLF, rest assured that loan servicers are still processing applications. The SAVE Plan’s current challenges haven’t disrupted the PSLF program.
Borrowers on SAVE can still leverage the Buyback Program to gain PSLF credit.
However, general forbearance time under SAVE won’t automatically count toward PSLF.
What Should Student Loan Borrowers Do Now?
Assess Your Repayment Plan:
If you’re on SAVE and pursuing PSLF or IDR forgiveness, consider switching to IBR or another qualifying plan to ensure your payments count.
Stay Updated:
Visit StudentAid.gov regularly for updates on repayment options and deadlines.
Sign up for the K-12 Planning weekly newsletter to stay up-to-date on all student loan updates!
Utilize the PSLF Buyback Program:
If you qualify, buying back credits can significantly shorten the time to loan forgiveness.
Prepare for Future Payments:
With SAVE repayments resuming in late 2025, now is the time to plan your budget and strategy.
Final Thoughts
The latest SAVE Plan updates are a mix of good and not-so-good news for borrowers. While the forbearance extension and paused payments provide temporary relief, the lack of progress toward forgiveness under certain plans is a significant consideration.
If you’re feeling overwhelmed, you’re not alone. Whether you need help choosing the right repayment plan, understanding forgiveness options, or navigating the PSLF Buyback Program, I’m here to guide you through what you need.
Have questions about your student loans? Let’s chat! Schedule a consultation today.
David Gourley, CSLP® is the Founder and lead Financial Planner at K-12 Planning, an independent financial planning firm specializing in finance for teachers. He served for eight years as a high school mathematics teacher before transitioning into the financial services industry. He started K-12 Planning in 2024 and his passion for serving as a fiduciary for teachers and a student loan planning expert runs deep, as his wife and several other family members have served as educators for years.
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