As SAVE Ends, Millions of Student Borrowers Could Face Higher Payments and Difficult Choices

Big changes have arrived for federal student loan borrowers: on July 1, a new repayment plan, the Repayment Assistant Plan (RAP), replaced all existing income-driven repayment (IDR) plans for new borrowers. Borrowers with existing loans may also opt into the plan. However, the 7 million borrowers who will be exiting the Saving on Valuable Education (SAVE) plan have faced several years of confusing messaging about their options, as legal challenges to the SAVE plan have wound their way through the courts. Now that the SAVE plan is being eliminated, previously enrolled SAVE borrowers are receiving notices giving them ninety days to select a new plan or be autoenrolled into the Standard Plan, which could result in much higher payments for some borrowers. 

Low-income borrowers may face significant financial consequences as a result of the elimination of SAVE, which offered more generous loan repayment and forgiveness benefits than the remaining repayment plans. SAVE borrowers will also have to navigate complicated decisions about what repayment plan option will best serve their needs. Many of those borrowers are already walking the edge: nearly one-quarter of student loan borrowers are delinquent, and one in five is in default, As American families grapple with an ongoing affordability crisis, predictable and manageable monthly student loan payments are crucial to avoiding a wave of new delinquencies and defaults. However, the end of the SAVE plan, and the confusion facing SAVE borrowers, may exacerbate an already-dire situation. Policymakers and advocates alike will benefit from better understanding the state of affairs and the stakes involved for those who rely on these programs.

How Did We Get Here?

SAVE borrowers have reason to be confused about their options. The SAVE plan, which became available to borrowers in 2023, was touted as the most affordable loan repayment plan ever for low-income students. The plan set monthly payments to $0 for borrowers at or below 225 percent of the federal poverty line, decreased the time to forgiveness for low-balance borrowers, and waived unpaid interest in some circumstances. However, shortly after the plan was unveiled, several states filed a suit arguing that the Department of Education (ED) lacked legal authority to create the new plan. Following a series of injunctions, ED agreed to a settlement in December 2025 which banned new enrollments in SAVE, prevented borrowers from receiving loan forgiveness through the plan, and provided that enrolled borrowers would be required to switch to a different repayment plan.

Separately, in July 2025, Congress passed H.R.1, which mandated a process to eliminate the SAVE plan by July 1, 2028 at latest. However, that 2028 date is just a placeholder: the elimination process began on July 1 of this year.

The potential for confusion is obvious. As the lawsuit worked its way through the courts, borrowers became uncertain about whether they would continue to have access to the plan; the H.R. 1 implementation has only made matters more complicated. Now that ED has begun contacting borrowers with a deadline for switching out of SAVE, many remain unsure of their options. Moreover, there has been no resolution to the litigation involving SAVE, adding to the uncertainty. Just days before the H.R.1 changes were due to take effect, an amended lawsuit was filed that asserted that eligible SAVE borrowers should be able to receive loan forgiveness and that other borrowers should be permitted to remain in Revised Pay As You Earn (REPAYE), the predecessor to SAVE,¹ rather than be forced into other options. 

Those exiting the SAVE plan need access to reliable information and targeted messaging to support them in making decisions that align with their financial goals.

Details aside, the writing is on the wall: SAVE will soon no longer be an option. Current SAVE borrowers are now faced with deciding to which repayment plan they should move. Unfortunately, the consequences of inaction or selecting the wrong plan may be severe. For nearly two years, the more than 7 million borrowers currently enrolled in SAVE have been in a prolonged forbearance² that hasn’t required them to make monthly payments. This reprieve will soon end, and a portion of borrowers, including those whose income was so low they previously qualified for $0 payments, will see their monthly repayment obligation increase. Those exiting the SAVE plan need access to reliable information and targeted messaging to support them in making decisions that align with their financial goals. This should be a top priority for the Department of Education, loan servicers, and trusted messengers.

The Sorry State of Federal Student Loan Infrastructure

To make matters worse, the repayment system is already under strain. As of April of this year, there was reportedly a backlog of over 530,000 borrowers waiting to be enrolled in income-driven repayment plans (excluding the 7 million SAVE borrowers who will be required to switch plans), as well as 88,000 pending applications for Public Service Loan Forgiveness. Borrowers have also reported errors by student loan servicers, including incorrect billing amounts. Moreover, ED has drastically reduced staff of its Office of Federal Student Aid (FSA), further hindering the department’s ability to oversee its student loan services. According to the Government Accountability Office, staffing cuts led FSA to stop monitoring servicer accuracy and call quality because of insufficient staff capacity.

And SAVE borrowers aren’t the only ones facing difficult choices. Two other IDR plans, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR), will officially sunset on July 1, 2028. Both these plans are currently available to SAVE borrowers who do not take on new loans, but those who opt into either of them will have to switch to a new plan, such as RAP or Income-Based Repayment (IBR), in less than two years. While all borrowers who do not take on any new loans after July 1, 2026 are eligible for “old” IBR, “new” IBR, which offers more income protection, is only available to borrowers who first received loans on or after July 1, 2014 and take on no new loans after July 1, 2026.

The mass exodus from SAVE, PAYE, and ICR will likely further strain the resources of student loan servicers. This may result in long waits, delayed processing, and billing errors. As a result, borrowers may see a repeat of the problems experienced after the three-year COVID-19 forbearance ended, in which some borrowers reported servicing errors, such as being put into the wrong repayment plan, resulting in inaccurate monthly payment amounts. 

What Options Do SAVE Borrowers Have Now?

The end of the SAVE plan will increase monthly payments for some struggling borrowers, end long-term forbearance for others, and strain the capacity of student loan servicers. As a result, SAVE’s elimination may tip some borrowers into default or delinquency.

Table 1 below lays out the differences between SAVE and the income-driven options available to borrowers going forward.

Table 1

With the elimination of SAVE, borrowers will have to choose between RAP and other remaining income-driven repayment (IDR) plans. For low-income borrowers, access to IDR plans is crucial for financial stability, and can help prevent delinquency and default. IDR repayment plans can make loan payments more manageable and offer a pathway to loan forgiveness. Compared to standard repayments, IDR plan options can improve borrower outcomes and help struggling borrowers as they face down an affordability crisis.

To help illustrate the comparative benefits for different types of borrowers, the following four tables offer examples of different professions, education types, incomes, and regions of residence. 

The Elimination of SAVE Will Mean Increased Monthly Payments for Many Borrowers

As we can see, borrowers exiting SAVE maintain access to IDR plans but for those with limited financial resources, these options are likely less favorable. Low- and very-income borrowers switching from the SAVE plan to RAP are likely to see a payment spike; and while SAVE offered $0 monthly payments to the lowest-income borrowers, RAP requires a minimum $10 monthly payment from all borrowers, even those below the poverty line.

RAP payments are tiered based on a borrower’s adjusted gross income, or “AGI,” as well as their number of dependents. Earning just one dollar above the AGI threshold pushes borrowers into the next tier, increasing their payments. RAP also extends a borrower’s guaranteed time to forgiveness considerably when compared with SAVE and the other plans scheduled to sunset in 2028. In addition to the lengthier forgiveness timeline, a smaller share of borrowers overall will receive forgiveness under RAP than SAVE or IBR, because more will have paid off their loan in full before they reach the end of their term.⁶

Borrowers in RAP could see a reduction in their overall balance during the time they spend in repayment, because under the plan, borrowers receive a subsidy that decreases their loan principal by $50 a month when they make on-time payments. While low- and moderate-income families may see value in these subsidies, borrowers must make on-time payments to take advantage of the interest subsidy and matching principal reduction.⁷ Families living paycheck to paycheck may struggle to keep up with their monthly repayment obligation and risk losing out on the most generous benefits of the plan.

Figure 1

SAVE borrowers are also affected by several changes to the existing loan repayment system that could impact borrower decision making. For example, the new federal law eliminated the “partial financial hardship” requirement for “new” IBR, opening the plan to more borrowers. Approximately half of all SAVE borrowers who switched plans by mid-July, transitioned into IBR. 

SAVE borrowers with existing loans as of July 1, 2026 who do not borrow new loans also have access to both the Graduated and Extended plans, which do not require income verification but may result in borrowers paying more in interest over time. These borrowers may also move to the Pay As You Earn (PAYE) plan, which caps payments at 10 percent of a borrower’s discretionary income and may prove more affordable for certain borrowers, though this plan will also phase out on July 1, 2028.

More Can Be Done to Help Borrowers with the Transition

The end of SAVE affects millions of student loan borrowers, many of them low-income. The potential risks for borrowers exiting SAVE are real, and the transition may push some into delinquency or default.

In light of the confusing array of options for SAVE borrowers, the Department of Education must step up outreach and communications efforts, as well as its oversight over student loan servicers, a task made more difficult as a result of staffing cuts at the Office of Federal Student Aid. The department must also ensure seamless implementation of application processing to support borrowers in making progress during repayment. Policy makers and ED should allocate more resources toward oversight of loan servicers during this period of transition.

The breadth of the potential fallout must not be underestimated. With nearly one-quarter of student loan borrowers delinquent and one in five is in default, the transition away from the SAVE plan threatens to push even more borrowers into financial distress. The Department of Education must expand borrower outreach, provide clear and timely information about options, and strengthen oversight of loan servicers. Without such action, loan defaults will likely increase, leaving millions of borrowers facing damaged credit and other severe consequences. 

1. SAVE modified and replaced the REPAYE plan with new terms and conditions. Unlike SAVE, REPAYE did not reduce the years to forgiveness for low-balance borrowers, had lower discretionary income protections for borrowers with undergraduate loans, and used a different discretionary income threshold.
2. The SAVE administrative forbearance began in July 2024 after federal courts issued a stay in the SAVE litigation. Borrowers in the SAVE plan forbearance did not begin seeing interest accrue in their accounts again until August 2025.
3. For borrowers with existing loans, the ten-year standard payment cap is calculated using your outstanding balance at the time you apply for the plan.
4. For borrowers with existing loans, the ten-year standard payment cap is calculated using your outstanding balance at the time you apply for the plan.
5. SAVE calculations are based on 2026 federal poverty guidelines.
6. Federal Register Vol. 91, No. 84 (May 1, 2026): TABLE 7—PROJECTED REPAYMENT OUTCOMES BY RACE AND ETHNICITY UNDER SAVE, IBR, AND THE REPAYMENT ASSISTANCE PLAN , 23853 https://www.govinfo.gov/content/pkg/FR-2026-05-01/pdf/2026-08556.pdf.
7. On-time payments must be received on or before the due date for the current month but after the due date for the previous month. Borrowers who miss their due date forfeit the interest waiver and principal match. Likewise, for borrowers pursuing loan forgiveness, only payments made on time count as a qualifying payment toward that forgiveness.

Tags: college affordability, student loan, student loan forgiveness, SAVE