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Tax identity theft victims are waiting nearly two years for resolution and refunds from the IRS, the National Taxpayer Advocate reported last week.
As of April, the agency had roughly 500,000 unresolved cases, up from 484,000 in September.
However, the IRS is working on a “range of improvements” to address the issue.

Erin Collins, national taxpayer advocate at the Taxpayer Advocate Service, speaks at a Senate Appropriations subcommittee hearing in Washington, D.C., on May 19, 2021.
Bloomberg | Bloomberg | Getty Images

There’s a pileup of tax identity theft cases at the IRS — but the agency is working on a “range of improvements” to speed up service.
As of April, the agency had roughly 500,000 unresolved identity theft cases, up from 484,000 cases in September, National Taxpayer Advocate Erin Collins reported last week. Identity theft victims have waited more than 22 months for resolution, plus several weeks for refunds.

Tax identity theft happens when criminals use stolen personal information to file a fraudulent tax return to claim a refund. If a criminal files before the taxpayer, the IRS rejects and freezes the second return for investigation.
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The wait has only grown longer over the past several months. Collins reported in January that identity theft victims were waiting 19 months for resolution and refunds, which stemmed from Covid-19 shutdowns and pandemic relief.
Those delays have caused “significant hardship” for taxpayers, especially lower earners, she wrote.
Nearly 70% of the cases involved taxpayers with an adjusted gross income at or below 250% of the federal poverty level.

“It has been four years from the onset of the pandemic, and the IRS’ delays in helping victims are unconscionable,” Collins wrote last week.
While taxpayer service has improved through the 2024 season, the backlog of identity theft cases remains “one of the most significant ongoing service gaps,” the IRS said in a statement.

IRS plans for ‘faster service’

The IRS said it’s working on improvements to provide “faster service” to identity theft victims, including more resources to work cases.
The agency also plans to review its processes and engage with stakeholders to “identify and prevent evolving tax-related identity theft threats.”
“Identity theft cases are complex and take time to resolve,” but increased funding has better positioned the agency to tackle these cases more quickly, the IRS said.

The agency on Tuesday warned tax professionals to protect themselves from identity theft criminals who could be targeting them and their clients.
“Security threats against tax professionals and their sensitive taxpayer information continue to evolve, and it’s critical to stay on top of the latest developments to protect their business and their clients,” IRS Commissioner Danny Werfel said in a statement on Tuesday.  More

If you’re a wealthy investor between the ages of 21 and 43, alternatives are probably at the top of your list of investments that may provide the most growth.
Yet wealthy investors who are ages 44 and up still tend to steer toward traditional stocks and bonds.
If you’re interested in alternatives, it’s wise to consider the risks and costs, experts say.

pixelfit | E+ | Getty Images

Young, wealthy investors don’t want their parents’ investments.
If you’re between the ages of 21 and 43 and have at least $3 million in investable assets, your preferred investments likely aren’t your traditional mix of stocks and bonds, according to new research from Bank of America.

Nearly one-third of young, wealthy investors’ portfolios are in alternative assets like hedge funds, private equity, and crypto and digital assets, according to Mike Pelzar, head of investments at Bank of America Private Bank.
Meanwhile, less than half of their portfolios are in traditional stocks and bonds.

Where wealthy investors ages 21 to 43 see greatest opportunities for growth

Real estate investments, 31%
Crypto/digital assets, 28%
Private equity, 26%
Personal company/brand, 24%
Direct investments in companies, 22%
Companies focused on positive impact, 21%Source: Bank of America

That’s in contrast to wealthy investors ages 44 and up, who have about three-quarters of their portfolios allocated to stocks and bonds, and only about 5% in alternative assets like hedge funds, private equity and real estate, he noted.
“The two different cohorts think very differently about what the greatest opportunities are for growth with their investments,” Pelzar said.
Younger investors’ appetite for alternatives isn’t expected to let up, with 93% indicating they plan to use more of those investments in the next few years, Bank of America’s research found.

Why younger investors have a different outlook

Much of the difference between younger and older wealthy investors’ outlook comes down to what kind of investments they grew up with, Pelzar explained.
“This younger generation has enjoyed much greater access to a broader set of asset classes than the older generation did as they were growing up,” Pelzar said.
The younger generation may also have less trust in traditional stocks and bonds after having lived through the financial crisis and dot-com bust. More recently, the increased correlation between equities and fixed income may be prompting them to diversify their assets.
“They’re looking to spread around the risk,” Pelzar said.

Where wealthy investors ages 44 and up see greatest opportunities for growth

Domestic equities, 41%
Real estate investments, 32%
Emerging market equities, 25%
International equities, 18%
Private equity, 15%
Direct investments in companies, 15%

Source: Bank of America

At the same time, younger, wealthy investors also have higher cash allocations, the research found. Some experts worry having more cash can lead to missing out on bigger market returns, even as today’s elevated rates guarantee the highest interest on cash in more than a decade.
“Underinvesting is a risk, and it’s one that I think more younger investors are susceptible to,” Callie Cox, chief market strategist at Ritholtz Wealth Management, recently told CNBC.com.
But higher cash allocations may make sense for younger, wealthy investors who have a lot of their net worth tied up in alternative investments that tend to be more illiquid, or who are planning to make big purchases, like buying a home, Pelzar said.

What to consider when planning

Another reason why young, wealthy investors may be turning to alternatives is because they have more choices.
“There’s never been a bigger menu of opportunities to put your money into,” said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth, a wealth management firm based in New York City.
When diversifying to alternatives, it’s important to be aware of the potential costs involved, said Boneparth, who is also a member of the CNBC FA Council.

Alternative investments may require your money to be locked up for a certain period of time, he said.
Alternatives may also come with unique costs, such as the 2 and 20 fee structure. It’s a fee arrangement that is standard in the hedge fund industry, and is also common in venture capital and private equity, where an annual management fee of 2% is charged for managing assets and a 20% standard performance or incentive fee applies to profits made by the fund above a certain predefined benchmark.
Expense ratios — management fees charged by investment funds — may also be higher for alternatives, Boneparth noted.
If you’re invested in an area like collectibles, the bid-ask spread — or the difference between quoted prices for a sale and purchase — may be larger or more unpredictable, he said.

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The movie “Thelma” follows a 93-year-old grandmother on a quest to get back the $10,000 she lost after falling victim to an imposter scam call.
The movie is based off a real scam call, which is growing increasingly common as AI makes it easy to clone voices with just a few seconds of audio pulled from social media. These are also known as grandparents’ scams or family emergency scams.
Financial experts recommend freezing credit and establishing a financial surrogate early for aging parents to protect their identity and assets.

Theatrical one-sheet for THELMA, a Magnolia Pictures release.
Courtesy: Magnolia Pictures

In the movie “Thelma,” 93-year-old Thelma Post receives a frantic call from what sounds like her grandson saying he’s in jail with a broken nose following an accident and needs $10,000.
Assuming the call is truly her grandson, Thelma, portrayed by June Squibb, follows the scammer’s instructions by fearfully gathering bunches of cash hidden around her home and sending it to a P.O. Box address. 

While this story was dramatized for Hollywood, the threat of such scam calls — also known as grandparents’ scams or family emergency scams — is genuine and getting easier in the age of artificial intelligence.
Total losses from imposter fraud last year reached nearly $2.7 billion, according to the U.S. Federal Trade Commission. But there are ways to stay vigilant, financial experts say, such as freezing your credit or obtaining power of attorney for a vulnerable parent.
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The scam attempt that happened to the real Thelma, the now 103-year-old grandmother of writer and director Josh Margolin, was almost identical to the movie. In the movie, Thelma goes on an epic adventure involving a scooter and a gun to track down her scammers and get her money back. 
In real life, Thelma’s family stopped her before she could send the money. 

“I think the kind of emotion leading [to] action there was definitely a real thing and something that I tried to dramatize in the movie as well,” Margolin told CNBC. “She was kind of getting ready to do it, because she was really panicked. And luckily she called my parents.”

Scammers exploit ‘fear and urgency’

Scams like the one Thelma fell victim to are increasingly common, experts say. Imposter fraud was the most common type of fraud reported to the FTC in 2023, and the agency saw an increase in reports of business and government impersonators.
Social media is fertile ground for harvesting content for these scams.
With advancements in generative AI, a scammer can run just a few seconds of audio from a TikTok video to make the harvested voice say whatever they want, according to computer security company McAfee. 
“Everybody should know that deep fakes are becoming more and more popular and common and easier to do, and there are whole industries built around scamming people,” said Carolyn McClanahan, a certified financial planner and physician who founded Life Planning Partners in Jacksonville, Florida.
Typically, AI voice scams mimic distress calls. It could be someone stuck on the side of the road after their car broke down or someone calling from jail in a foreign country claiming they need bail money. The common denominator is that it’s coming from someone you care about who needs money “fast.” 
A 2023 survey from McAfee found that 25% of adults have experienced a similar AI voice scam — and the company says 77% of victims have lost money as a result. The company polled 7,054 adults in seven countries, including 1,009 in the United States.
Thelma’s age in the movie was a factor in her vulnerability.
“They target the elderly, because as we get older, we lose cognitive flexibility, meaning that we can’t make decisions as quickly, and so it takes us longer to think through things,” said McClanahan, who is a member of CNBC’s Financial Advisor Council. “And so these scamsters use techniques like fear and urgency to try to get you to act immediately.”

But older adults aren’t the only ones at risk; younger people who spend more time online are increasingly vulnerable, CFP Andrew Sivertsen said.
“You think about Gen Z and young millennials, I mean, just the number of impressions that they have online with technology is just exponentially more than seniors and so they’re falling victim to a higher number of scams,” said Sivertsen, a senior planner at The Planning Center in Moline, Illinois.

Protecting loved ones and yourself from scams

Speaking with an older loved one about the risk of being scammed can be difficult, and much of the movie showed Thelma grappling with her own autonomy in the situation.
After falling for the scam, she had to come to terms with the fact that she needed help with technology and taking care of herself, but she wasn’t ready to give up her freedom. 
“You have to find a way to kind of process the feelings of watching somebody go through something like this, but also to do so in a thoughtful way, so that when you do talk to them about it, you don’t kind of add to the shame and embarrassment that I believe is probably already there,” Margolin said. 

One way to be proactive about this is by establishing an aging plan when you are in your late 50s or early 60s, and including other family members in that conversation. McClanahan said she does this with her clients to determine who can act as a financial surrogate later in life.
“If you wait until somebody is experiencing symptoms or having cognitive issues, then what happens is they become defensive, they become in denial,” McClanahan said. “They’re afraid of losing control, afraid of losing their freedom.”
Basic security practices can also go a long way.
Sivertsen recommends freezing your credit and setting up multifactor authentication on social media and bank accounts to serve as a barrier protecting your personal information from scammers. You can also purchase identity theft insurance, he said, which can help remedy compromised information.
If you or a loved one does fall victim to a scam, usa.gov/where-report-scams lets you enter details about the scam to direct you to where it should be reported. 

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More than one-third of summer vacationers say they are willing to take on debt to pay for their travel, according to a Bankrate survey.
You lose the plot — and your money — when what’s supposed to be for you becomes about showcasing it for everyone else.
When planning a vacation, dial into the things that are important to you and your family — not what’s trending online.

Two winters ago, we vacationed to a hot-spot resort in the Caribbean with our family. Around the perimeter of its casino concourse, a variety of attractions buzzed for our consumption.
We found an art installation to climb on, faux floral arches to position ourselves around and giant milkshakes topped with full desserts in sugar-rimmed glasses to sip from — well, not before the photos.

Photos came first.
To be honest, it felt less like a vacation and more like a visit to one of those immersive exhibits where everything’s a photo-op and everyone you know has taken the same exact photos there. This is because they have taken the same exact photos there, and doubtless, geotagged their location.

More from CNBC’s Advisor Council

Social media has transformed the reason we take photos on vacation. According to a survey conducted by Forbes Advisor, 82% of Gen Zers and 57% of millennials visit certain destinations because they saw them on social media. Many people post their travels in real time, engaging in a perpetual game of capture and share. According to the same survey, 74% of respondents feel some kind of pressure to imitate the travel content they consume online.
Without question, we fell into that camp on our vacation. It was performative, exhausting, and above all, absurdly expensive.
Don’t get us wrong — we love social media for connecting with friends, drawing inspiration from others, and yes, even drooling a bit over beautiful destinations. But its hazard lies in clouding your better judgment when making financial decisions that might not be worth it in real life.

This summer, a little more than half of Americans are planning to take a vacation, according to a Bankrate survey. Out of those travelers, 36% are prepared to take on debt to pay for it. Costs continue to rise across the board for flights, accommodations, even dining, and consumer buying is keeping pace. In the process, many travelers are losing sight of their long-term goals to capture something that feels important in a moment but isn’t at all.

‘Pics or it didn’t happen’ comes at a cost

Morsa Images | Digitalvision | Getty Images

You lose the plot — and your money — when what’s supposed to be for you becomes about showcasing it for everyone else. It’s a classic case of “pics or it didn’t happen.” You can end up spending more time focused on the wrong elements of your vacation, like positioning yourself for the perfect sunset photo-op but then not watching the actual sunset, or filming half of a concert with the camera flipped around on you.
We’ve all done this; it’s no one person’s fault. But is snapping those pics worth paying inflated prices? Going into credit card debt? Stretching your annual vacation budget to accommodate the resort everyone claims to love so much?
Without core memories affixed to those photos, they are not nearly as valuable. The casino resort was crowded, the restaurants priced like Las Vegas, the waits long for almost anything. We had a lovely time together as a family, but almost nothing we snapped a photo of contributed to that time.

Dial into vacation elements that are important to you

When you’re trying to budget and plan for your summer vacation, come up with your cost ceiling first. See how much your proposed travel and accommodation costs eat into that number. If they almost reach your limit, maybe that version of the trip is too expensive. You want to leave room to experience the vacation, and those experiences will come at a cost.
In terms of what you choose to do, put yourselves at the center of those decisions. What will cause you to depart for home from your vacation saying, that felt really good?
Dial into the things that are important to you and your family — not what’s trending online. If you’re into food, focus on the food. If you’re into adventure, invest in that. When you set your itinerary with intention, you find the perspective you need to scale back on the superfluous things that cause you to overspend.

Finally, try putting your phone away or leaving it in the room, just for a little while. Tap into all five senses instead of diverting to some of your ordinary coping mechanisms. Nothing will be more memorable than trying, tasting or seeing something new that you don’t get in the ordinary course of your life.
Take it from us. We went away over the same weekend the following year to a beautiful, much more low-key resort on the beach. While there, we read whole books. Our phones lived in our bags. Our feet lived in the sand. Sure, we took photos, but we took more away from our time together than any photo-op would capture.
— By Heather and Douglas Boneparth of The Joint Account, a money newsletter for couples. Douglas is a certified financial planner and the president of Bone Fide Wealth in New York City. Heather, an attorney, is the firm’s director of business and legal affairs. Douglas is also a member of the CNBC Financial Advisor Council.

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Consumers lost a whopping $1.14 billion to romance scams in 2023, according to the Federal Trade Commission.
“Romance scams tend to be some of the more insidious because they prey on emotions,” said a fraud expert. “These things happen in real life, these aren’t just shows that we see on Netflix.” 

Tolgart | E+ | Getty Images

Cybercriminals are targeting wealth accounts by tapping into a victim’s emotions.
So-called romance scams involve building a relationship and trust with the victim so that the target willingly provides access to their accounts or transfers money to the criminal, explained Tracy Kitten, the director of fraud and security at Javelin Strategy & Research, a financial research services firm.

Consumers lost $1.14 billion to romance scams in 2023, according to the Federal Trade Commission. Median losses per person amounted to $2,000, the highest reported losses for any form of imposter scam, the FTC found.
“Romance scams tend to be some of the more insidious because they prey on emotions,” Kitten said. “These things happen in real life, these aren’t just shows that we see on Netflix.” 
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“What people need to realize is that people behind these types of scams could teach a master class in human behavior,” said Theresa Payton, a former White House chief information officer who is now the CEO of cybersecurity firm Fortalice Solutions.
“They know the different emotional trigger points that we all have, and that’s when they strike,” Payton added.

‘They trust the person who’s manipulating them’

Romance scammers trick their victims into thinking they’re someone they’re not. Over time, the criminal will develop a relationship with the victim, Kitten explained.
Once trust is established, the victim may be more easily convinced to send money, provide access to their bank accounts, and, in some cases, even launder funds for them, she said.
About 22% of surveyed financial advisors with clients affected by fraud have had clients who fell victim to a romance scam, according to Javelin. The survey fielded 1,500 financial advisors in July 2023.
Oftentimes, cybercriminals are reaching out and developing relationships over social media platforms, Kitten said.
It’s a really easy way for them to fool their victims because there’s no face-to-face contact,” she said.

About 40% of people who said they lost money to a romance scam in 2022 said the contact started on social media, the FTC found.
Almost three-quarters, or 73%, of consumers who had been victimized by a romance scam were men, according to Javelin data. For that report, Javelin polled 5,000 U.S. households in November 2022.
“At this point, we’re all exposed,” Fortalice Solutions’ Payton said. “Even if you don’t have a big social media footprint, your data points are out there.”  

Spotting ‘the biggest red flag’ for romance scams

There are ways to detect if a romance scammer has targeted you. “The biggest red flag,” said Payton, is requests for money. 
Here are five more warning signs:

Unsolicited text messages: Scammers can use bots that can reach out to hundreds of people at a time through cell phone numbers, email addresses and social media accounts. Some messages are as simple as “hi.” “All it takes is just for one person to take the bait,” she said.
Too good to be true: If the person is suddenly very interested in the same things as you, and wants to carry the conversation in a different direct messaging platform, that can be another red flag.
Refusal to meet in person: The scammer will make up excuses for not wanting to meet in real life. Yet sometimes the alternative can occur: The scammer might ask for money for travel expenses to come out and meet you, Payton said. 
Isolation attempts: If the scammer discourages you from talking to family or friends of the new romantic interest. 
Pressure tactics: If the new contact is badgering you to keep up the relationship, ask for money or financial information. 

In these long-term scams, it’s often hard for the victim to see that they’ve been scammed because “they trust the person who’s manipulating them,” Kitten said. 
Financial advisors can help their clients by educating them on what cybercrime could look like. Doing so can “go a long way” to help victims understand when they’ve been scammed, said Kitten.
Here are five things you can do to vet the new contact, according to Payton:

Reverse search the image: Use reverse-search tools for images online to verify the images the potential scammer is using.
Look at your privacy settings: Be mindful of the information that you share on social media.
If you meet someone, take your time: Make sure to ask questions about their background. Keep track of what they say and look for inconsistencies.
Avoid financial transactions: Do not send financial information or funds to the person at first ask. Talk to family, friends, trusted advisors and bankers about the situation.
Meet at a public spot: Ask to meet them in person in a public spot or close to a police station. If they act “sketchy,” said Payton, “you have your answer.”

Report suspicious profiles or messages to the online platform you’re using and then report the incident to the FTC at ReportFraud.ftc.gov. If the situation has escalated, report the incident to the Federal Bureau of Investigation.
Victims can seek free support and counseling through The Cybercrime Support Network, which offers a free 10-week virtual romance scam recovery group, led by licensed counselors, Payton said. More

Many retirees are still feeling the impact of higher prices.
Yet data points to a lower Social Security cost-of-living adjustment in 2025.
Here’s the most recent estimate based on the latest price movements.

Eva-katalin | E+ | Getty Images

Retirees are still feeling the impact of higher prices.
Yet one buffer for the effects of inflation — the Social Security cost-of-living adjustment, or COLA, — may be lower next year.

As the rate of inflation moderates, the Social Security COLA for 2025 might be 3%, according to the latest estimate from Mary Johnson, an independent Social Security and Medicare policy analyst.
That estimate is lower than the 3.2% boost to benefits that more than 66 million beneficiaries saw starting in January. It is also substantially lower than the record 8.7% COLA beneficiaries saw in 2023 and the 5.9% COLA that went into effect in 2022 in response to record-high inflation.

How the Social Security COLA is calculated

The annual adjustments are based on a subset of the Consumer Price Index, known as the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W.

Every year, the Social Security Administration compares the third quarter CPI-W data for that year with the third quarter of the previous year. If there is a percentage increase from one year to the next, that determines the COLA. However, if there is no increase, there is no COLA.
Because it is still very early in the year, the Social Security COLA estimate may be subject to change.

Why early COLA estimates for 2025 are lower

A look at the latest CPI-W data helps show why the increase is down from the record-high increases retirees recently saw.
The prices for certain categories saw a double-digit percentage decline compared with two years ago as of May. Fuel oil was down 35.3%; airline fares dropped 19.4%; and gasoline declined by 17.7%.

‘Undercounting real senior inflation’

Many retirees coped with inflation by making adjustments, such as cutting back on savings or dipping into existing assets, according to the Center for Retirement Research at Boston College.
“They take a big hit to their future wealth by doing that,” Laura Quinby, senior research economist at the Center for Retirement Research, previously told CNBC.com.
The effects of Social Security’s cost-of-living adjustments vary for individuals based on their personal expenses and where they live, according to Quinby.
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Some experts argue the CPI-W is not a perfect measure for retiree spending. For example, while the CPI-W assumes older adults spend about 66% of their income on housing, food and medical costs, in reality about 75% of their income is devoted to those costs, according to Johnson.
“This disparity suggests that my COLA estimate, which is based on the CPI-W, may be undercounting real senior inflation by more than 10 percent,” Johnson said.
Nevertheless, the latest CPI-W shows where inflation is subsiding and rising — which may ultimately affect next year’s COLA. More

Many retirees don’t think about taxes until it’s time to withdraw funds from a pre-tax account, which can be a costly mistake, financial experts say.
However, you can reduce your lifetime tax burden by strategically receiving more income in lower-earning years to fill your “buckets” or federal tax brackets.
It’s also important to consider taxes during the accumulation phase by diversifying contributions across pretax, Roth and brokerage accounts.

Johner Images | Johner Images Royalty-free | Getty Images

Many retirees don’t think about taxes until it’s time to withdraw funds from a pretax account, which can be a costly mistake, financial experts say.
Only 3 in 10 Americans have a plan to reduce taxes on retirement savings, according to a Northwestern Mutual study from January that polled roughly 4,600 U.S. adults.

However, the “bucket strategy” is one way to minimize that burden, according to certified financial planner Sean Lovison, founder of Purpose Built Financial Services in the Philadelphia metro area.  
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You can reduce your lifetime tax burden by strategically receiving more income in lower-earning years to fill your “buckets” or federal tax brackets, said Lovison, who is also a certified public accountant. 
For example, if you’re in the 12% tax bracket before collecting Social Security, that could be a chance for Roth individual retirement account conversions to save on taxes later, he said.
Roth conversions transfer pretax or nondeductible IRA money to a Roth IRA, which won’t incur levies on future withdrawals. The trade-off is upfront taxes on your converted balance.

You could reduce pretax balances by converting enough to put yourself in the 22% or 24% tax bracket. Otherwise, you could be in the 32%, 35% or 37% tax bracket once Social Security and required minimum distributions, or RMDs, kick in, Lovison said.
Secure 2.0 pushed the beginning date for RMDs to age 73 starting in 2023 and that age jumps to 75 in 2033. Meanwhile, pretax 401(k) and IRA balances are growing.
“That’s a real issue right now that people don’t really think about,” Lovison said.

Focus on taxes in the ‘accumulation phase’

Often, investors don’t think about taxes until they start making withdrawals from pretax retirement accounts, said CFP Judy Brown at SC&H Group in the Washington, D.C., and Baltimore area. She is also a certified public accountant.
“They thought they had $1 million in their 401(k), but really it’s only $700,000 after taxes,” she said. “A lot of people see the value of tax planning when they get to that distribution.”
However, tax planning is key during the “accumulation phase,” as you’re growing your nest egg. Adding to pretax, Roth and brokerage accounts can provide “tax diversification,” Brown said.
Those accounts will provide “a lot of different levers to pull” to better manage your adjusted gross income in retirement, she added. More

The Biden administration’s new repayment plan for student loan borrowers — the Saving on a Valuable Education, or SAVE, plan — is facing legal challenges.
Here’s what relief borrowers can still expect.

Damircudic | E+ | Getty Images

Millions of student loan borrowers were looking forward to a smaller monthly bill come July, until a legal challenge to the Biden administration’s new relief plan got in the way last week.
But on June 30, a federal appeals court gave the U.S. Department of Education the green light to implement a major provision of its new Saving on a Valuable Education, or SAVE, plan.

The bottom line: As promised, most enrolled borrowers should still see their July bills come down.
Here are some answers to other questions borrowers might have.

Why is the SAVE plan being challenged?

President Joe Biden rolled out the SAVE plan in the summer of 2023, describing it as “the most affordable student loan plan ever.” SAVE replaced the Education Department’s former REPAYE option, or Revised Pay As You Earn plan.
So far, around 8 million borrowers have signed up for the new income-driven repayment, or IDR, plan, according to the White House.
Under IDR plans, borrowers’ monthly payments are set based on a share of their discretionary income. They receive forgiveness after a set period, typically 20 years or 25 years.

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The SAVE plan has the most generous terms to date, which has led to the current controversy.
Instead of paying 10% of their discretionary income a month toward their undergraduate student debt, as they did under REPAYE, borrowers need to pay just 5%.
Those who earn less than roughly $15 an hour have a $0 monthly bill, and borrowers with smaller balances are entitled to loan forgiveness on an expedited timeline — in as little as 10 years.
“The SAVE plan is very generous to borrowers, almost like a grant after the fact,” higher education expert Mark Kantrowitz said in a previous interview with CNBC.

Where do the lawsuits against SAVE stand?

Republican-backed states, including Florida, Arkansas and Missouri, filed lawsuits against the SAVE plan earlier this year.
The states argued that the Biden administration was overstepping its authority with SAVE, and essentially trying to find a roundabout way to forgive student debt after the Supreme Court blocked its sweeping plan last year. In response, two federal judges in Kansas and Missouri temporarily halted significant parts of the SAVE plan on June 24.
As a result, the Biden administration was prevented from forgiving debt on a faster timeline under the new income-driven repayment plan and from further reducing borrowers’ payments in July, as it planned to.

Those rulings came down days before payments were set to drop. As a result, the U.S. Department of Justice geared up to appeal the injunctions and the Education Department announced it would temporarily pause payments for many SAVE borrowers while the legal proceedings played out.
It has now decided the payments will continue. That’s due to the fact that the Biden administration’s appeal against one of the injunctions, which prevented it from lowering payments, was successful. The case has not been decided yet, but at least for now the Education Department can proceed with reducing borrowers’ bills.
Meanwhile, the second injunction against the SAVE plan regarding expedited loan forgiveness, which came down last week from a federal judge in Missouri, remains in effect.

What does this mean for me?

As a result of its successful appeal, the Biden administration is currently moving ahead with the SAVE plan provision that slashes borrowers’ monthly payments to 5% of their discretionary income. Many people will see their bill cut in half.

If your loan servicer already sent you a bill that reflects your lower payment, you should plan to pay that bill in July, the Education Department said.
If you were placed in a forbearance because your loan servicer is still calculating your new lower payment or anticipated bills would be temporarily paused during the legal drama, you should aim to make your first payment in August —and that bill should be reduced.
If you have a $0 monthly bill under SAVE — which some 4.5 million people do — you will continue to owe nothing and be considered up to date on your payments, the department said. More