The Trump administration has required federal student loan borrowers to leave the SAVE income-driven repayment plan, which was eliminated through Republican-led legal challenges and legislation. Borrowers received approximately 90 days from notification to transition to another repayment program, with the earliest deadline on Sept. 29 for those notified on July 1. Additional borrowers will receive notifications through October, according to servicers handling the transitions.
More than 6.9 million borrowers held SAVE accounts as of March, carrying an average debt of approximately $55,000. The Biden administration-era plan offered significantly reduced monthly payments calculated at 5% of discretionary income. Many enrollees have avoided making payments for over two years while legal proceedings continued, during which their debts accumulated additional interest and progress toward loan forgiveness stalled. Experts attribute the slow exodus from SAVE to borrowers either hoping the situation will resolve without action or lacking time and financial capacity to navigate the transition.
Borrowers who fail to select an alternative plan within their 90-day window will be automatically placed into either the Standard Repayment Plan or the new Tiered Standard Plan, both of which calculate fixed payments over set periods rather than income-based formulas. This shift could result in substantial payment increases, with some borrowers potentially seeing monthly obligations double or triple. The Education Department is currently processing a significant backlog of income-driven repayment applications, with more than 530,000 requests pending as of May.
Alternative income-driven plans remain available, including the newly launched Repayment Assistance Plan, which caps payments between 1% and 10% of earnings and includes loan forgiveness after 30 years. Analysis indicates substantial differences in payment obligations depending on plan selection. Borrowers are advised to verify their deadlines through their loan servicer websites or studentaid.gov, ensure current contact information is registered, and calculate potential payments on alternative plans to prepare for the transition.
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