The Education Department is preparing to start throwing unknown numbers of student loan borrowers off of their repayment plan by the end of September, as the first key deadline for switching out of the SAVE plan is expected to expire. The looming change is the latest disruption to impact borrowers with federal student loans as major program reforms, servicer mistakes, and data glitches combine to create a perfect storm of uncertainty.
The forced repayment plan changes center on the SAVE plan, a now largely-defunct income-driven repayment program that had offered borrowers affordable payments and eventual student loan forgiveness. But after the Trump administration and the Republican-led states that had successfully challenged the program reached a settlement agreement earlier this year to terminate the popular plan, the Education Department began moving forward to force student loans off of SAVE. By the end of September, the first wave of borrowers who didn’t act in accordance with a department directive to change plans within 90 days will be involuntarily moved into Standard repayment plans, potentially with catastrophic consequences for borrowers.
Here are the latest developments on the SAVE plan transition, and what they mean for student loans.
Student Loans In SAVE Repayment Plan Will Be Kicked Out By September 29
Starting in July, the Education Department’s contracted student loan servicers began sending borrowers official notices that they had to move their student loans from SAVE to another income-driven repayment plan within 90 days. If they don’t act within that 90-day window, the department would force them onto a Standard plan.
“Borrowers who have loans in forbearance because they enrolled in or applied for the Saving on a Valuable Education (SAVE) Plan must select a new repayment plan,” says the department’s webpage dedicated to SAVE plan legal updates. “If you don’t select a new repayment plan, your loan servicer will move you to a different plan.”
“If you’re currently enrolled in the SAVE Plan but don’t submit a new application for a different repayment plan within 90 days, you will be placed on the Standard Repayment Plan,” reads the official notice sent to borrowers. “If you have a new loan in repayment on or after July 1, 2026, we will place you on the Tiered Standard Plan.”
The first SAVE plan borrowers received their 90-day notices on July 1. The Education Department has not provided any public data on the number of borrowers whose 90-day clock began ticking at the beginning of July, as loan servicers have been sending out the notices in batches roughly every two weeks. But that 90-day window for this first group of borrowers will expire on September 29, and they will be the first people whose student loans are thrown off of the SAVE plan.
Importantly, not everyone in SAVE has received their 90-day notices yet. The Education Department and its contractors are expected to continue sending out notices to move student loans out of the SAVE plan through October.
Student Loans Will Be Placed In One Of Three Possible Standard Repayment Plans
SAVE plan borrowers who don’t affirmatively act to enroll their student loans in a different income-driven repayment plan will be placed in a Standard repayment plan instead. But they won’t have a choice; the Education Department will force borrowers into one of three specific types of Standard repayment plans, based on the type of student loans they have:
- Borrowers with non-consolidated student loans that were disbursed prior to July 1, 2026, will be placed on a 10-year Standard plan.
- Borrowers with a Direct consolidation loan disbursed prior to July 1, 2026 will be placed on a consolidation Standard plan, with a repayment term ranging from 10 to 30 years depending on the loan’s balance.
- Borrowers with any student loans disbursed on or after July 1, 2026 will be placed on the new Tiered Standard repayment plan, with a repayment term ranging from 10 to 25 years depending on the loan’s balance.
In many cases, payments under any of these Standard repayment plans will be unaffordable for borrowers who had affordable payments under the SAVE plan. For example, a borrower with a federal student loan balance of $100,000 and an annual income of $65,000 could have had payments of as low as $170 per month under SAVE. But their monthly payments could skyrocket to anywhere from $650 to $1,150 per month under a Standard plan, depending on their interest rate and repayment term.
The Standard plan payments may be even higher than expected because in most cases, time the borrower has already spent in repayment under other repayment plans is counted against the Standard plan’s repayment term. In other words, if a borrower was in repayment under the SAVE plan for, say, two years, and then is switched to the 10-year Standard plan, they may have an actual Standard plan repayment term of eight years, rather than 10. That would cause the borrower’s monthly payments to be even higher.
In addition, unlike income-driven repayment plans, most payments made under a Standard plan will not count toward student loan forgiveness. That is true for both loan forgiveness under IDR plans (which is typically allowable after 20 to 30 years in repayment, depending on the plan) and under Public Service Loan Forgiveness, or PSLF, which can allow student loans to be discharged in as little as 10 years. Only the 10-year Standard plan is a qualifying repayment plan for PSLF.
Borrowers Can Move Student Loans To Another Income-Driven Repayment Plan
Borrowers with student loans in the SAVE plan who are approaching the end of their 90-day window, and don’t want to be placed in a Standard repayment plan, may want to take steps now to enroll in a different income-driven repayment plan. Depending on eligibility, borrowers will typically have up to four IDR options to select from:
- Pay As You Earn (or PAYE) is usually the next-most affordable income-driven repayment option after SAVE. But PAYE is limited to borrowers who first borrowed on or after October 1, 2007, and had at least one additional disbursement on or after October 1 2011, so not everyone will be eligible. PAYE is also getting phased out in 2028 under the One Big, Beautiful Bill Act, so at best, PAYE will be just a temporary option for qualifying borrowers.
- Income-Contingent Repayment (or ICR) is the most expensive IDR option and won’t make sense for most borrowers, with the exception of some Parent PLUS borrowers and borrowers with very low balances. As with PAYE, ICR is getting phased out by 2028.
- Income-Based Repayment (or IBR) is the only “legacy” income-driven repayment plan preserved under the One Big, Beautiful Bill Act. It is a potentially viable option for borrowers with student loans in the SAVE plan, and has a 25-year term for student loan forgiveness. But for many borrowers, IBR payments will be much higher than what they were paying under SAVE.
- The Repayment Assistance Plan (or RAP) is the newest income-driven repayment plan that just launched in July. RAP uses a much different payment calculation formula than the other IDR plans, and while RAP will often be more affordable than IBR, that won’t always be the case. RAP has an interest subsidy and principal benefit that can prevent long-term balance growth (as long as borrowers are making their student loan payments on time every month), but the tradeoff is a 30-year repayment term before a borrower can qualify for loan forgiveness.
The right move for student loan borrowers very much depends on their specific circumstances including their current and projected income, marital status, family size, and goals. In many cases, any of the IDR options will be more affordable than any of the Standard plan options borrowers will be forced into if they don’t select a different plan. But almost universally, borrowers will see higher payments on their student loans than they experienced under SAVE under all other repayment plan options, which advocates warn will be unsustainable and may lead to spiking default rates in the coming months.
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