SAVE Plan Exit: 7.5M Student Loan Borrowers Must Switch by July 2026

The SAVE student loan repayment plan has been blocked by a federal court, leaving 7.5 million borrowers with a deadline to switch to alternative plans or face higher payments under the Standard Repayment Plan.

Why the SAVE Plan is Ending

• The SAVE plan, introduced by the Biden administration in 2023, was challenged in court by Republican-led states.
• A federal appeals court blocked the plan in March 2025, citing lack of authority for the promised forgiveness and payment reductions.
• Borrowers have been in administrative forbearance since the summer of 2024, with interest resuming in August 2024.

Key Deadline for Borrowers

• Borrowers have 90 days starting July 1, 2026, to select a new repayment plan.
• Loan servicers will communicate specific deadlines to affected individuals.

Available Repayment Options

• Income-Based Repayment (IBR): Payments based on income, with forgiveness after 20 years.
• Repayment Assistance Plan (RAP): New plan from July 1, 2026, with payments from 1% to 10% of earnings, minimum $10, forgiveness after 30 years.
• Standard Repayment Plan: Fixed payments over 10 years, or new tiered plan over 10, 15, 20, or 25 years based on loan balance.

Comparing Your Choices

• Use online tools to estimate payments under different plans.
• IBR may offer better long-term terms with earlier forgiveness compared to RAP.
• Standard plan might suit borrowers with low balances and higher incomes.
• For Public Service Loan Forgiveness, income-driven plans are essential for 10-year cancellation.

How to Switch Plans

• Apply via Studentaid.gov or your loan servicer's website for income-driven plans.
• Opt for IRS income verification to speed up processing.
• Submit alternative income documentation if recent tax returns don't reflect current income.
• Expect delays due to a backlog of over 576,000 applications as of February 2025.

Consequences of Inaction

• Borrowers who do not switch by the deadline will be automatically enrolled in the Standard Repayment Plan or its new tiered version.
• Payments are likely higher than under SAVE.
• Debt has grown due to accruing interest since August 2024; average SAVE enrollee owes about $57,000 at 6.7% interest.
• No progress toward forgiveness while in SAVE or under standard plans.

If You Can't Afford Payments

• Explore income-driven plans for lower payments based on earnings.
• Contact loan servicers for assistance or deferment options.