The U.S. Department of Education has announced next steps for the millions of student loan borrowers who were enrolled in the SAVE repayment plan. With the program now ending, borrowers will need to transition into a new federal repayment option.
Roughly 7–7.5 million borrowers will be impacted. The Department is beginning direct outreach to guide borrowers through the transition and help them select a new repayment plan. Borrowers should expect emails and notifications from Federal Student Aid and their loan servicers with instructions on what to do next.
Starting July 1, loan servicers will begin issuing formal notices. Once contacted, borrowers will have at least 90 days to select a new repayment plan. If no action is taken within that window, borrowers will be automatically placed into a standard repayment plan or a new tiered option.
Borrowers will be able to choose from existing income-driven repayment (IDR) plans or upcoming options, including:
- Repayment Assistance Plan (RAP): Payments are based on income and family size. Unlike existing IDR plans, RAP ensures that borrowers who make full, on-time monthly payments will be shielded from runaway interest and are able to make progress toward reducing the principal balance on their loan.
- Tiered Standard Plan: offer fixed terms – Offers fixed terms (10, 15, 20, or 25 years) based on a borrower’s total outstanding loan balance, giving borrowers with higher debt lower monthly payments and more time to repay.
These plans are designed to provide structured repayment while offering flexibility based on borrowers’ financial situations.
The Department is encouraging borrowers to act early and explore their options. Key steps include:
- Reviewing repayment options using federal tools like the Loan Simulator
- Updating income information to streamline enrollment in IDR plans
- Contacting loan servicers if they want to switch plans before receiving a formal notice
- Providing consent for IRS data sharing can also speed up the application process.
The end of the SAVE plan marks a significant shift in federal student loan repayment. Borrowers should watch for official communications, evaluate their repayment options carefully, and make a timely decision to avoid being automatically placed into a default plan.