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The Trump administration announced Friday that student loan borrowers will soon be excluded from the Save for Valuable Education (SAVE) plan.
The Department of Education announced it would send guidance to the 7.5 million people who signed up for the now-defunct repayment plan. “In the guidance, the Department provides information on how borrowers can enroll in the new statutory federal student loan repayment plan and previews upcoming changes to student loan repayment options,” according to the announcement.
Exit of SAVE enrollees has been slow, with about 7.2 million remaining in the program as of December, according to recently released agency data.
Here’s what renters need to know.
Why is the SAVE plan being retired?
Shortly after the Biden administration introduced the SAVE plan in 2023, several Republican-led states filed a lawsuit seeking to block its implementation, arguing that President Joe Biden did not have the authority to grant the waivers and payment reductions promised in the plan.
After nearly two years of litigation, the SAVE plan was formally blocked by a federal appeals court in early March.
Borrowers who enrolled in the plan but did not switch to another repayment plan have been administratively suspended with their payments not due since the plan was challenged in court in the summer of 2024. Interest accrual resumed for these borrowers in August.
When is the deadline to exit SAVE?
Borrowers will have 90 days from July 1, 2026 to choose another repayment plan, the U.S. Department of Education said in a statement. Loan servicers will notify affected borrowers of specific deadlines.
What other repayment methods are available?
Borrowers can enroll now in an existing income-based repayment plan, such as Income-Based Repayment Plan (IBR), or wait until the new repayment assistance plan begins on July 1st.
RAP was established in July following the passage of President Donald Trump’s “Big, Beautiful Act.” 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.
Standard repayment plans are also available to borrowers who want fixed monthly repayments over 10 years, regardless of their income. A new graduated standard repayment plan, also created by recent legislation, will be introduced on July 1 with the option for borrowers to extend their loan term to 10, 15, 20 or 25 years.
How can I compare repayment options?
There are several tools available online that can help you see how much your monthly bill will be on different plans.
“Most borrowers will be better off with IBR than RAP,” said higher education expert Mark Kantrowitz.
With IBR, loan forgiveness can be achieved in 20 years, compared to the 30-year timeline under RAP. He added that some borrowers may pay less with RAP than with IBR, but end up paying more over the life of the loan.
However, depending on your income and loan balance, a standard repayment plan may be more advantageous.
“Borrowers with relatively low loan balances and high incomes may choose a standard plan,” said NerdWallet lending expert Kate Wood. “Because it makes more sense to pay more and save on interest versus pay less for a longer period of time.”
One exception: If you’re working on public service loan forgiveness, you’re eligible to have your loan canceled after 10 years, as long as you’re on an income-driven repayment plan. Experts say these borrowers can focus on keeping their monthly payments as low as possible.
How do I finish saving?
To apply for the new income-driven repayment plan, borrowers log into Studentaid.gov or their loan servicer’s website and fill out an application. Borrowers can opt-in to allow the department to obtain income information directly from the Internal Revenue Service to expedite application processing.
However, if your most recent filed tax return doesn’t reflect your current income, perhaps because you haven’t filed it yet or earned less than the previous year, you may want to submit other documentation to prove your income, such as a recent pay stub, Wood said.
You can request to enroll in a standard repayment plan through your loan servicer.
If you submit an application for a new repayment plan, expect delays. The Department of Education is grappling with a backlog of applications for income-based repayment plans, with more than 576,000 applications pending at the end of February, the department reported in a March court filing.
What happens if I do nothing?
The Department of Education will automatically place borrowers who do not move into another repayment plan by the deadline into either the standard repayment plan or a new tiered version of that plan. In either version, these fixed payments can be higher than your obligations under SAVE.
Under current standard plans, borrowers typically split their debt into fixed payments over 10 years. The new Standard Plan spreads a borrower’s debt over fixed repayments over one of four periods, depending on the borrower.
Those who borrow up to $24,999 have a 10-year repayment period. However, those who owe between $25,000 and $49,999 will have 15 years to pay off their debt. Balances between $50,000 and $99,999 are repaid over 20 years. Debts over $100,000 will be repaid over 25 years.
Staying on SAVE during that time also comes at a cost. By Kantrowitz’s calculations, the typical SAVE registrant has a loan balance of about $57,000 and an interest rate of 6.7%. He calculated that this means their debt has increased by more than $2,500 since interest accrual resumed in August.
SAVE student loan borrowers also have not made any progress toward debt forgiveness under the repayment plans or terms of Public Service Loan Forgiveness.
