The Trump administration has required borrowers to leave the SAVE income-driven repayment plan, which was eliminated through legal challenges and legislation. Borrowers who were notified starting July 1 must transition to another program by September 29, though servicers are notifying borrowers in staggered waves, meaning most will have additional time to make the switch. As of March, more than 6.9 million borrowers remained in SAVE with an average debt of nearly $55,000, according to higher education analyst Mark Kantrowitz.
Borrowers who fail to select an alternative repayment plan within 90 days of receiving their transition notice will automatically be enrolled in either the Standard Repayment Plan or the newly launched Tiered Standard Plan. Under these default options, monthly payments could double or triple compared to what SAVE borrowers previously paid, as standard plans divide debt into fixed payments over set periods rather than basing payments on a percentage of discretionary income.
Borrowers seeking to avoid sharp payment increases should apply for one of the Education Department’s income-driven repayment alternatives. The Repayment Assistance Plan, launched in July, caps monthly payments between 1% and 10% of earnings and includes loan forgiveness after 30 years, plus a $50 monthly discount per qualifying dependent. According to analysis, a household earning just over $50,000 with $60,000 in student debt could pay $690 monthly under standard repayment but only $158 under RAP.
Borrowers are urged to verify their contact information with their loan servicers and check their accounts immediately to confirm their individual transition deadlines. The Education Department is currently managing a significant backlog of more than 530,000 pending income-driven repayment plan applications, which may cause processing delays. Financial advisors recommend borrowers calculate potential payments under alternative plans now and begin budgeting accordingly to avoid payment shock.
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