Student loan borrowers face deadline to leave SAVE repayment plan

Student loan borrowers will soon be removed from the Saving on a Valuable Education, or SAVE, plan, the Trump administration announced on Friday.

The Education Department said it would send guidance to the 7.5 million people who signed up for the now-defunct repayment plan. “In the guidance, the Department provides information on how borrowers can enroll in a new, legal federal student loan repayment plan and previews upcoming changes to student loan repayment options,” according to the announcement.

SAVE enrollees have been slow to exit: Roughly 7.2 million people remained in the program as of December, according to recently released agency data.

Here’s what borrowers need to know.

Soon after the Biden administration introduced the SAVE plan in 2023, several Republican-led states sued to block its implementation, arguing that President Joe Biden did not have the authority to grant the forgiveness and lower payments the plan promised.

After nearly two years of litigation, the SAVE plan was officially blocked by a federal appeals court earlier in March.

Borrowers who enrolled in the plan but haven’t switched into another repayment plan have been in an administrative forbearance without payments due since the plan was challenged in court in the summer of 2024. Interest resumed accruing for those borrowers in August.

Borrowers will have 90 days starting on July 1, 2026, to select another repayment plan, the U.S. Department of Education said in its statement. Loan servicers will communicate specific deadlines to affected borrowers.

Borrowers can enroll now in existing income-driven repayment plans — such as the Income-Based Repayment plan, or IBR — or wait until the new Repayment Assistance Plan rolls out on July 1. 

RAP was established in July with the passage of President Donald Trump’s “big beautiful bill.” Under RAP, monthly payments will typically range from 1% to 10% of your earnings; the more you make, the bigger your required payment. There will be a minimum monthly payment of $10 for all borrowers.

The Standard Repayment Plan is also available for borrowers who want fixed monthly payments over 10 years, regardless of their income. A new tiered standard repayment plan, also created by the recent legislation, will roll out on July 1 with options for borrowers to extend their loan term over 10, 15, 20 or 25 years.

There are several tools available online to help you determine how much your monthly bill would be under different plans.

“Most borrowers will be better off in IBR” than in RAP, said higher education expert Mark Kantrowitz.

Loan forgiveness can come in 20 years under IBR, compared with the 30-year timeline on RAP. While some borrowers may have a smaller payment on RAP than IBR, they’ll pay more over the life of the loan, he added.

Depending on their income and loan balance, some borrowers may be better off on the standard repayment plan, though.

“If you’re a borrower with a relatively low loan balance and a higher income, you might decide to go with the standard plan,” said Kate Wood, lending expert at Banking Herald. “Because making higher payments and saving on interest versus making lower payments for longer makes more sense.”

One exception: If you’re working toward Public Service Loan Forgiveness, you’re eligible for loan cancellation after 10 years, as long as you’re on an income-driven repayment plan. Those borrowers can focus on securing the lowest possible monthly payment, experts say.

To apply for a new income-driven repayment plan, borrowers can log into Studentaid.gov or their loan servicer’s website and fill out the application. Borrowers can opt in to allow the department to get their income information directly from the Internal Revenue Service for faster application processing.

However, if your most recent tax return on file doesn’t reflect your current income — because you haven’t filed yet or you’re making less money than you did in a prior year, for example — you might want to submit other documentation for income verification, like recent pay stubs, Wood said.

You can request to be placed in the Standard Repayment Plan through your loan servicer.

Expect delays when submitting an application for a new repayment plan. The Education Department is working through a backlog of income-driven repayment plan applications, with more than 576,000 requests pending as of the end of February, the department reported in a March court filing.

The Education Department will automatically put borrowers who do not move into another repayment plan by its deadline into either the Standard Repayment Plan or the new tiered version of that plan. With either version, those fixed payments are likely to be higher than their obligations under SAVE.

Under the current standard plan, borrowers typically have their debt divided into fixed payments over 10 years. The new Standard Plan will spread a borrower’s debt into fixed payments over one of four time frames, depending on what they owe.

Those who’ve borrowed up to $24,999 will still have a 10-year repayment term. But those who owe between $25,000 and $49,999 will pay their debt back over 15 years; a balance ranging from $50,000 to $99,999 will be paid back over 20 years; and a debt over $100,000 will be repaid over 25 years.

Remaining in SAVE during the interim will also be costly. The typical SAVE enrollee has a loan balance of around $57,000 and a 6.7% interest rate, according to Kantrowitz’s calculations. That would mean their debt has grown by over $2,500 since interest accrual resumed in August, he calculated.

Student loan borrowers in SAVE are also not making any progress toward debt forgiveness, under either the terms of their repayment plan or under Public Service Loan Forgiveness.