Updated

Updated · USA TODAY · Jun 16

Millions of SAVE Borrowers Get 90 Days to Switch Plans as July 1 Rules Narrow Options

Updated

Updated · USA TODAY · Jun 16

Millions of SAVE Borrowers Get 90 Days to Switch Plans as July 1 Rules Narrow Options

Q: With a popular loan plan ending July 1st, what must 7 million borrowers do to avoid a sudden payment shock?

To avoid a sudden payment shock, roughly 7 million borrowers on the SAVE plan must choose and apply for a new repayment plan within 90 days after notices begin going out on July 1. If they do nothing, they will be automatically moved into a fixed-payment standard-style plan, typically designed to pay off loans in about 10 years. That plan usually does not offer forgiveness and often carries much higher monthly bills than SAVE, which is why consumer advocates warn of a sharp jump in payments. For many borrowers with loans issued before July 1, 2026 and no new borrowing, the main alternatives are existing income-driven plans such as Income-Based Repayment, Pay As You Earn, or Income-Contingent Repayment, as well as the new Repayment Assistance Plan. Those options differ on monthly payment formulas, forgiveness timelines, and whether very low-income borrowers can qualify for the lowest payments. Experts say borrowers should compare plans carefully based on income, family size, and whether they are pursuing Public Service Loan Forgiveness. Borrowers can apply through their loan servicer or StudentAid.gov, and experts advise acting early because processing delays are possible. If a new payment still looks unaffordable, borrowers may need to switch plans again or seek temporary forbearance, though interest can continue to build. The key step is not to let the 90-day window pass without selecting a replacement plan.

3 articles · Updated · USA TODAY · Jun 16

Millions of borrowers still in the defunct SAVE plan will get about 90 days after July 1 to choose a new repayment option when servicers begin contacting them.
Studentaid.gov review is urgent because waiting could trigger automatic placement into a standard repayment plan, which typically carries fixed monthly bills that may be higher.
IBR is one immediate alternative for existing borrowers, and experts say switching there can keep Public Service Loan Forgiveness and income-driven forgiveness credit moving; SAVE payments no longer do.
After July 1, plan choices shrink: PAYE, ICR and IBR close to new loans disbursed on or after that date, while new borrowers get only Standard or RAP.
RAP, the replacement income-driven option, sets payments at 1% to 10% of adjusted gross income, or $10 monthly for borrowers earning under $10,000, with forgiveness after 30 years.

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With a popular loan plan ending July 1st, what must 7 million borrowers do to avoid a sudden payment shock?

As federal loan options shrink, how will future doctors and lawyers afford their essential education?

The End of the SAVE Plan: What Student Loan Borrowers Must Know Before July 1, 2026

Overview

The SAVE plan, a major federal student loan repayment option, will end on July 1, 2026, after a series of lawsuits from states like Missouri challenged the Department of Education’s authority to create it. Federal courts, including the 8th Circuit, sided with these arguments and issued an injunction in 2024 that stopped the plan’s operations and put borrowers into forbearance. This legal pressure led to a settlement requiring the plan’s termination. As a result, millions of borrowers must now choose new repayment plans, facing higher payments and fewer benefits, while the student loan system undergoes significant changes.

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