More than seven million borrowers may soon see their student loan payments skyrocket as the Education Department implements a settlement agreement that ends the SAVE plan.
Last month, the Trump administration entered into a settlement agreement with the state of Missouri and other GOP-led states that had brought a legal challenge over the SAVE plan, a Biden-era repayment program that offered reduced payments and fast-tracked student loan forgiveness. That settlement is still pending court approval, but once it is finalized, millions of borrowers with student loans enrolled in SAVE who have been in a no-payment forbearance for more than a year will likely be forced back into repayment.
While borrowers may have options to keep their payments manageable, they will have a limited time to act. And payments on student loans will almost universally be higher under other repayment plans compared to what they were under SAVE. Here’s the latest, and what student loan borrowers need to know.
What The SAVE Plan Settlement Means For Student Loan Borrowers
The Education Department’s settlement agreement with the state of Missouri would effectively end the SAVE plan, once it is approved by court (and the court is expected to approve it).
“The Department will not permit anyone else to enroll in SAVE (or the plan that SAVE replaced, called REPAYE), and it will deny any pending applications for SAVE,” under the terms of the settlement, explained the National Consumer Law Center in a blog post last month. “The Department will work to move borrowers already enrolled in SAVE out of SAVE and into a different repayment plan. The Department will not forgive any loans through the SAVE Plan (or through the plan that SAVE replaced, called REPAYE). The Department will not implement any provisions of the 2023 repayment rules that created the SAVE plan with one exception: it will implement a provision that allows certain types of deferments and forbearances to count as qualifying time toward loan forgiveness in income-driven repayment plans. This provision is 34 C.F.R. § 685.209(k)(4)(iv).”
Millions Of Student Loan Borrowers Will Need To Switch Repayment Plans
With the SAVE plan ending, the approximately seven million borrowers who have been in the long-term administrative forbearance will likely be forced to quickly resume repayment. The National Consumer Law Center anticipates that borrowers will be offered a limited time window to select a different repayment plan. Otherwise, the Education Department may automatically start billing borrowers under a plan that the borrower didn’t even choose. However, the department has not yet provided specifics on anticipated deadlines.
“Under the settlement, the Department agrees to work to move all of the borrowers currently in the SAVE plan out and into a different repayment plan,” explained NCLC in the blog post. “The settlement does not say how soon borrowers will have to move out of the SAVE plan. In its press release, the Department of Education said that borrowers in SAVE will have ‘a limited time’ to select a new repayment plan. The Department has not said what repayment plan the Department will move borrowers into if they do not select a new repayment plan.”
But NCLC warned that borrowers with student loans in the SAVE plan should expect their monthly payments to be higher under any other repayment plan option.
“SAVE was the most affordable repayment plan, and your last payments in SAVE were likely based on your income from two or more years ago,” said NCLC. “Your new payments will most likely be higher in whatever plan you switch to, both because other plans are more expensive than SAVE and because your payments will likely be based on more recent income, which may have gone up.”
Another student loan advocacy organization, Protect Borrowers, had warned in a letter submitted to House Republicans in May that borrowers forced to switch from SAVE to another repayment plan “will experience an immediate and unprecedented payment shock as their monthly payments jump from $0 per month to $431 for a typical single student loan borrower with a college degree—an annual increase of more than $5,000.”
Disruptions And Processing Delays Possible For Student Loan Borrowers
Student loan borrower advocacy groups are warning that the Education Department is not prepared for the massive influx of repayment plan applications that borrowers are likely to submit as a result of the SAVE plan’s elimination. The department is already struggling to address a backlog of applications for other income-driven repayment plans. That backlog stood at around two million outstanding applications in the spring of 2025, but more than 800,000 IDR applications remain in that backlog, according to data released by the department in December. Adding millions of additional IDR applications to the queue will undoubtedly cause additional strains to the processing system.
“ED is not well prepared to smoothly transition borrowers into other plans,” warned The Institute For College Access and Success, or TICAS, in an analysis in December following the SAVE plan settlement announcement. “ED has also not completed the process of implementing the new income-based plan created in OBBBA, the Repayment Assistance Plan (RAP). They have not yet completed the final rulemaking process nor built out their systems to enable borrowers to apply for enrollment. RAP is set to go into effect in July 2026. Meanwhile, nearly half (48%) of borrowers have said they are facing long wait times to speak to or receive a response from a loan servicer when they reach out for assistance. There continues to be a backlog of repayment plan applications that servicers have not yet processed, with some borrowers waiting more than six months for resolution.”
Borrowers with student loans in the SAVE plan forbearance have already lost months of credit toward student loan forgiveness, as the forbearance does not count toward IDR repayment terms. And that may continue for borrowers who face processing-related disruptions.
“ED has not told borrowers how long they’ll have to switch into a new plan or how long it will take for servicers to process applications,” said TICAS. “ED has also given no indication of what recourse borrowers would have if they lose out on months of credit toward loan discharge—and face mounting interest charges—due to servicer processing delays.”
What Student Loan Borrowers In The SAVE Plan Can Do
NCLC suggested that borrowers in the SAVE plan forbearance may want to start taking steps now to switch to a different repayment plan, before the Education Department forces their hand or picks their plan for them. And applying for a different plan sooner rather than later may be prudent, given the possibility of future processing disruptions and backlog-related delays.
“Borrowers currently enrolled in SAVE do not have to wait to switch plans,” said NCLC in its blog post. “If you are currently in SAVE, you should consider learning more about other repayment options, using the Loan Simulator to estimate your payments in other plans, and potentially applying for a new repayment plan.” NCLC also suggested that borrowers allow “time to rework your budget and consider all of your options before diving into a new plan,” given that monthly payments will likely be higher.
If borrowers with student loans enrolled in SAVE don’t select another repayment plan, the Education Department may automatically put them into a more expensive option, such as the Standard repayment plan. Ultimately, the department is expected to release more information once the court approves the settlement agreement. Student loan borrowers will then have some difficult decisions to make.
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