Student Loan Servicers Begin 90-Day Exit Process for SAVE Plan Borrowers

Fg Trade | E+ | Getty Images

Over 6.9 million borrowers enrolled in the Biden-era Saving on a Valuable Education (SAVE) plan must transition to alternative repayment options by September 29, though individual deadlines vary based on servicer notifications. A federal appeals court previously ruled to terminate the program, prompting the Department of Education to enforce the exit timeline.

The SAVE plan, which offered income-driven repayment terms and eventual debt forgiveness, is being phased out as part of the Trump administration’s “one big beautiful bill act,” effective July 1. Servicers are contacting borrowers in waves, with notices expected between July 2026 and March 2027.

Borrowers can proactively switch plans via their Federal Student Aid account at StudentAid.gov, avoiding potential placement into the Standard Repayment Plan or the new Tiered Standard Plan—options that may result in higher monthly payments. Failure to act within the 90-day window could lead to automatic enrollment in these more costly plans or eventual loan default after 270 days of nonpayment.

The newly introduced Repayment Assistance Plan (RAP) offers monthly payments between 1% and 10% of earnings, with a $10 minimum and eligibility for forgiveness after 30 years. Existing income-driven plans, such as Income-Based Repayment (IBR), remain available, though PAYE and Income-Contingent Repayment (ICR) no longer qualify for forgiveness. Current PAYE/ICR participants may remain until their expiration in July 2028, after which prior payments will count toward forgiveness under alternative plans.

Key Deadlines and Consequences

Borrowers who miss the transition deadline without securing a new plan risk delinquency and potential wage garnishment, though collection actions are currently suspended. The Department of Education emphasizes the importance of proactive enrollment to avoid financial instability.

Choosing the Right Repayment Plan

Online tools can help estimate monthly payments under different federal plans. Factors such as income, family size, and loan balance influence the optimal choice. RAP provides unique perks, including $50 monthly reductions per qualifying dependent, while IBR offers forgiveness after 20 or 25 years depending on loan disbursement dates.

You do not have to wait for the notices to switch plans.

Nancy Nierman

assistant director of EDCAP

Borrowers are encouraged to evaluate their options early to ensure a smooth transition and minimize financial strain. The Education Debt Consumer Assistance Program (EDCAP) and other resources remain available for guidance.

Source link