Millions of borrowers have student loan payments paused. Here's what they need to know.

• Millions of federal student loan payments are currently paused as the Biden administration defends its new relief program in court.
• Here's what borrowers need to know while the SAVE plan is blocked.

Millions of borrowers are temporarily exempt from making federal student loan payments as the Biden administration defends its new relief initiative in court.

Here's what to know.

Who doesn't have to make payments?

The Biden administration's new income-driven repayment plan, known as SAVE, has placed federal student loan borrowers enrolled in an administrative forbearance. These borrowers will remain in forbearance while the legal battle involving SAVE is ongoing.

During the break, eligible borrowers in that repayment plan will not have to make any payments on their debt, and their loans will not accrue any interest.

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Approximately 8 million individuals are enrolled in the Saving on a Valuable Education (SAVE) program, according to the White House.

According to the Education Department, borrowers eligible for relief should be notified by their servicer.

Why is the SAVE plan under fire?

The SAVE plan has been a source of controversy since its introduction by the Biden administration in the summer of 2023, with it being described as the "most affordable student loan plan ever."

The new income-driven repayment plan is the most generous to date.

The SAVE plan has two key provisions that have been targeted by legal challenges: lower monthly payments than any other federal student loan repayment plan and quicker debt erasure for those with small balances.

The Education Department is being sued by Republican-led states over its SAVE program, which they argue is an attempt to bypass the Supreme Court's decision and forgive student debt.

The Education Department had already forgiven $5.5 billion in student debt for 414,000 borrowers through the SAVE Plan. Experts say that those who have already received the relief should be in the clear before any legal challenges.

What is the current status of SAVE?

The Missouri federal appeals court issued a ruling on July 18, blocking the entire plan. Despite the Education Department officials' vow to fight, the plan's future remains uncertain.

How does the forbearance work?

Unlike other payment pauses on student loans, the months during this forbearance will not contribute to borrowers' progress toward loan forgiveness.

Individuals enrolled in SAVE who aspire to have their debt forgiven through the income-driven repayment plan or Public Service Loan Forgiveness are not receiving credit towards loan cancellation on their timeline. The PSLF program enables certain non-profit and government employees to have their debt cleared after 10 years of payments.

"Borrowers cannot opt out of this forbearance because the SAVE repayment plan is temporarily blocked," said higher education expert Mark Kantrowitz. However, borrowers can explore their other repayment plan options, but that would lead to a higher monthly loan payment, according to Kantrowitz.

"The borrower won't lose anything other than time by sticking to the SAVE plan," he stated.