Student loan servicers begin issuing SAVE plan termination notices

Official information: Student loan borrowers enrolled in the Saving on a Valuable Education plan (known as SAVE) must exit the program.

Loan servicers began warning borrowers this month that they have 90 days to move to another plan. Earlier this year, a federal appeals court ordered an end to the Biden administration-era SAVE program.

More than 6.9 million borrowers were still in SAVE status as of March, with an average debt of nearly $55,000, according to an analysis by higher education expert Mark Kantrowitz. Borrowers have been slow to leave the program, with about 7.7 million people participating a year ago.

Under President Donald Trump’s “Big Beautiful Bill,” SAVE enrollees will face an overhaul of their repayment options. These changes went into effect on July 1st.

There’s more SAVE borrowers need to know about what happens next.

The U.S. Department of Education said in a June 25 court filing that the earliest deadline for SAVE withdrawal would be September 29. Still, most borrowers will get more time, the ministry said.

For example, the FAQ on Nelnet’s website states that the servicer is “notifying approximately 3 million Nelnet borrowers in waves. Notices are expected to arrive between July 2026 and March 2027.”

If your loan servicer contacts you, you have 90 days to enroll in another plan. Nicholas Kent, a senior official at the U.S. Department of Education, told CNBC in June that these announcements could be made on different dates throughout the summer.

Servicers will notify borrowers of specific termination deadlines, so it is important for borrowers to pay attention to those notices.

“There is no universal exit deadline, and years of policy changes have left borrowers in a quagmire,” said Will Seeley, founder and CEO of Summer, which provides guidance to loan holders.

However, borrowers can be proactive. “You don’t have to wait for notice to switch plans,” says Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York, a nonprofit that helps borrowers repay their debt.

Whenever you’re ready to begin the plan switching process, you can log into your federal student aid account at StudentAid.gov.

Borrowers who do not select a different repayment plan within 90 days of being notified will be placed into either the standard repayment plan or the new tiered standard plan that will be rolled out on July 1st.

“The most important thing we are telling borrowers at this time is to evaluate your options and make a plan to enroll in a new repayment plan by the SAVE end date,” Seeley said.

“Otherwise, you risk automatically enrolling in a standard plan, which tends to be the most expensive repayment option,” he said.

If you miss the transition deadline and end up on a standard plan you can’t afford, you can still apply to enroll in an income-based repayment plan later, Nierman added. IDR plans limit your monthly bill to a percentage of your income.

However, if you exit SAVE and do not resume payments on another plan, your loan may become delinquent and you may be in default if no payments are made for 270 days.

After 360 days of nonpayment, the government can garnish your wages, tax refunds, and Social Security payments. The Trump administration has postponed a planned resumption of wage garnishment and collections in January, but officials have not yet said when those measures will resume.

There are tools available online to help you determine how much your monthly bill will be under various federal student loan repayment plans.

“The best plan for a SAVE borrower will depend on many factors, including income, family size and loan balance,” Seeley said.

Starting this month, borrowers can now take advantage of a new IDR plan called the Repayment Assistance Plan (RAP). With RAP, monthly payments typically range from 1% to 10% of revenue. The more you earn, the more payments you will need to make. The minimum monthly payment is $10 for all borrowers.

With RAP, student loans are forgiven after 30 years, compared to the typical 20- or 25-year schedules of other IDR plans.

However, RAP comes with some perks. For example, federal student loan borrowers receive $50 off their monthly bill for each eligible dependent.

Many borrowers will have other options.

Those with existing federal student loans will maintain access to some of their current IDR plans, including income-based repayment plans (IBR). Under the terms of IBR, if a borrower takes out a loan on or after July 1, 2014, the borrower will pay 10% of their discretionary income each month. For borrowers who took out loans before that date, that percentage rises to 15%. New borrowers will be eligible for debt forgiveness after 20 years, and older borrowers will be eligible for debt forgiveness after 25 years.

Current borrowers have access to income-contingent repayment plans (ICR) and PAE (Pay As You Earn plans) for a limited period of time, but neither program currently results in debt forgiveness. Carolina Rodriguez, director of EDCAP, said the only reason you might want to sign up for one plan or the other is because it will give you the lowest monthly payment.

If so, you can keep your ICR or PAYE until your plan expires on July 1, 2028. If you then switch to IBR or RAP, you will be entitled to a credit to forgive your previous payment.