Student loan servicers begin SAVE plan exit notices

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It’s official: Student borrowers enrolled in the Saving on a Valuable Education plan, known as SAVE, need to exit the program.

Loan servicers have begun alerting borrowers this month that they have 90 days to move into another plan. Earlier this year, a federal appeals court ordered the end of the Biden administration-era SAVE plan.

More than 6.9 million borrowers were still in SAVE as of March, with an average debt of close to $55,000, according to an analysis by higher education expert Mark Kantrowitz. Borrowers have been slow to leave the plan: around 7.7 million were in the program a year ago.

SAVE enrollees will face an overhauled menu of repayment options, due to President Donald Trump’s “one big beautiful bill act.” Those changes went into effect July 1.

Here’s what else borrowers in SAVE need to know about what comes next.

When do I need to exit the plan?

The earliest deadline to exit SAVE will be Sept. 29, the U.S. Department of Education said in a June 25 court filing. Yet most borrowers will get more time, the department said.

For example, an FAQ on Nelnet’s website notes that the servicer “is notifying nearly three million Nelnet borrowers, so we’re reaching out in waves. You’ll receive your notice between July 2026 and March 2027.”

Once you hear from your loan servicer, you’ll have a 90-day window to enroll in a different plan. Those announcements could come on different dates throughout the summer, Nicholas Kent, a top official at the U.S. Department of Education, told CNBC in June.

Servicers will inform borrowers of their specific deadline to exit, so it’s important for borrowers to be on the lookout for that notice.

“There isn’t one universal exit deadline, which muddies the waters for borrowers after years of policy changes,” said Will Sealy, the CEO and founder of Summer, a company that provides guidance to loan holders.

What happens if I do nothing?

Borrowers who do not select another repayment plan within 90 days of being notified will be placed in either the Standard Repayment Plan, or the new Tiered Standard Plan, which rolled out on July 1.

“The most important thing we tell borrowers right now is to assess your options and make a plan to enroll in a new repayment plan before your SAVE exit deadline,” Sealy said.

“If you don’t, you risk being automatically placed on the Standard Plan, which tends to be the most expensive repayment option,” he said.

If you miss the transition deadline and are placed in a Standard plan that you cannot afford, you can still submit an application to enroll in an income-driven repayment plan later on, Nierman added. IDR plans cap your monthly bill at a share of your income.

But if you don’t restart making payments on another plan after exiting SAVE, your loans could enter delinquency and, after 270 days of nonpayment, you’ll likely go into default.

After 360 days of nonpayment, the government could garnish your wages, tax refunds and Social Security payments. The Trump administration delayed a scheduled resumption of wage garnishments and collections in January, and officials haven’t yet said when they’ll resume those actions.

How do I figure out the best new plan for me?

There are tools available online to help you determine how much your monthly bill would be under different federal student loan repayment plans.

“The best plan for borrowers on SAVE depends on a number of factors, including income, family size and loan balance,” Sealy said.

Starting this month, borrowers have access to a new IDR plan, called the Repayment Assistance Plan, or RAP. Under RAP, monthly payments will typically range from 1% to 10% of your earnings; the more you make, the bigger your required payment. There will be a minimum monthly payment of $10 for all borrowers.

RAP leads to student loan forgiveness after 30 years, compared with the typical 20-year or 25-year timeline on other IDR plans.

But RAP comes with a few perks: Federal student loan borrowers get $50 off their monthly bill per qualifying dependent, for example.

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

Nancy Nierman

assistant director of EDCAP

Many borrowers will have other options.

Those with existing federal student loans will maintain access to some current IDR plans, including the Income-Based Repayment plan, or IBR. Under the terms of IBR, borrowers pay 10% of their discretionary income each month if their loans were taken out on or after July 1, 2014. That share rises to 15% for borrowers with loans before that date. The newer borrowers are eligible for debt forgiveness after 20 years, and older borrowers after 25 years.

While the Income-Contingent Repayment plan, or ICR, and PAYE, or the Pay As You Earn plan, remain available to current borrowers for a period, neither program now results in debt forgiveness. The only reason you’d want to be in either plan, then, is if it brings you the lowest monthly payment, said Carolina Rodriguez, director of EDCAP.

If that’s the case, you can remain in ICR or PAYE until the plans expire on July 1, 2028. Afterward, if you switch into IBR or RAP, you’re entitled to credit toward forgiveness for your previous payments.

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