WASHINGTON, D.C. — More than 7.5 million student loan borrowers will be required to transition into new repayment plans after a federal court settlement ended the SAVE program, prompting the U.S. Department of Education to begin issuing guidance last week.
What This Means for You
- Borrowers in the SAVE plan must choose a new repayment option within 90 days
- Those who do not act will be automatically placed into a standard plan
- New repayment options, including an income-based plan, launch July 1
The Department of Education said it has begun notifying borrowers enrolled in the Saving on a Valuable Education plan — an income-driven repayment program that tied monthly payments to income — that they must move into a legally approved repayment plan.
Why the Program Is Ending
The SAVE plan was introduced under the previous administration and was blocked multiple times by federal courts before being formally ended through a court-approved settlement earlier this month.
As part of the agreement, the department will stop enrolling new borrowers, deny pending applications, and transition all current participants into other repayment plans.
What Borrowers Need to Do
Beginning July 1, loan servicers will issue notices giving borrowers at least 90 days to select a new repayment plan.
Borrowers who do not choose a plan within that timeframe will be automatically enrolled in either a Standard Repayment Plan or a new Tiered Standard Plan, depending on their loan balance.
Officials said borrowers can switch plans at any time before receiving their formal deadline notice.
New Repayment Options
The department is introducing a new Repayment Assistance Plan, an income-driven option that adjusts monthly payments based on income and family size.
Unlike some previous plans, officials said the program is designed to prevent loan balances from growing due to unpaid interest while borrowers make consistent payments.
A Tiered Standard Plan will also be available, offering fixed repayment terms ranging from 10 to 25 years, with longer terms for borrowers carrying higher balances.
Application Process
Borrowers must apply for a new repayment plan, including income-driven options, which may require providing access to federal tax information through the Internal Revenue Service to verify income.
Officials said this process can speed up application approvals and reduce paperwork.
Next Steps
The Department of Education, through its Federal Student Aid office, has begun emailing affected borrowers with instructions on selecting a new repayment plan.
Additional details about the court settlement and repayment options are available at StudentAid.gov/courtactions.
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