Instead of years, more than seven million student loan borrowers only have months to find a new repayment plan.
At the beginning of the month, borrowers received emails notifying them that the Saving on a Valuable Education (SAVE) Plan is ending.
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Kate Wood, a lending expert with NerdWallet, sat down with WRAL's 5 On Your Side to explain what borrowers should do next.
“This plan was always going to go away as a result of the One Big Beautiful Bill Act, but in that case, we would have seen the plan sunset in 2028,” Wood said.
Starting in July, borrowers will have up to 90 days to select a new repayment plan. That means people still enrolled in the SAVE Plan will be transitioned out by fall.
“For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration’s policy is simple: if you take out a loan, you must pay it back,” said Under Secretary of Education Nicholas Kent in a news release from the U.S. Department of Education.
According to the U.S. Department of Education, borrowers who do not transition plans within the 90-day period communicated by their servicer will be automatically enrolled into either the Standard Repayment Plan, or the new Tiered Standard Plan, which will be available beginning July 1.
Servicers will notify borrowers of their specific 90-day deadline.
Wood warned that loans repaid through the standard plan will not be forgiven.
“It's also likely to give you the highest payment out of any of these plans, because the standard plan simply takes the amount of your debt and splits it up over a set number of months," she said.
Breakdown of each repayment plan
This table provided by SoFi Learn takes a closer look at how RAP differs from the three payment plans that are being discontinued: Saving on a Valuable Education (SAVE) plan, the Pay As You Earn (PAYE) plan, and Income-Contingent Repayment (ICR).
| Feature | RAP | SAVE | PAYE | ICR |
| Payment amount | $10, or 1%-10% of AGI | 10% of discretionary income | 10% of discretionary income | Lesser of 20% of discretionary income or what you would pay on a 12-year plan with a fixed payment |
| Repayment term in years | 30 | 20 or 25 | 20 | 25 |
| Family size/dependents | Flat $50 monthly discount, per child dependent | Factored into payment calculation | Factored into payment calculation | Factored into payment calculation |
| Unpaid interest | Monthly unpaid interest is waived | Monthly unpaid interest is waived | Monthly unpaid interest is waived for first 2 years (subsidized loans only) | Monthly unpaid interest is waived for first 2 years (subsidized loans only) |
Two of the plans will be phased out by the end of 2028: Income-Contingent Repayment (ICR) and Pay As You Earn, PAYE.
Student loan bills will likely increase
The SAVE Plan was struck down by a federal court in March. Borrowers enrolled in that plan have been in forbearance since July 2024.
“If you are someone who is on the SAVE plan now, your student loan bill is certainly going to be higher... because, of course, in the forbearance you weren't required to make payments,” Wood said.
The SAVE plan provided more lenient terms than other repayment plans, reducing loan payments to as little as 5% of a borrower's discretionary income and offering forgiveness for borrowers who made payments for at least 10 years and originally borrowed $12,000 or less.
“[The SAVE] plan protected borrowers’ income significantly more generously than any of the other income-driven repayment plans,” Wood explained.
Impacts on student loan forgiveness
“Folks who are working toward forgiveness are already a little bit behind because of having been in the SAVE forbearance,” Wood said. “On the SAVE forbearance, they are not getting credit for those months toward forgiveness.”
Depending on the plan, borrowers can be eligible for forgiveness after 20-25 years of qualifying payments. Once the RAP plan launches, forgiveness is possible after 30 years.
For Public Service Loan Forgiveness, borrowers must work full-time for a qualified employer and make 120 qualifying payments.
Final Public Service Loan Forgiveness (PSLF) program regulations will be effective on July 1.
The Education Department reports that more than 1,800 institutions have nonpayment rates at or exceeding 25%.
Some borrowers have expressed concerns about being able to afford higher payments once they switch, further pushing out their ability to reach forgiveness.
Next steps
“This can be a really scary, really uncertain time, but what you want to avoid doing is just waiting,” Wood said.
Borrowers can transition before their loan servicer communicates a specific 90-day deadline to enroll in another repayment plan.
In fact, Wood recommends it.
“Try to figure out how you can make your budget accommodate one of these plans...Be proactive about it, rather than simply waiting to let something happen to your budget,” she said.
One way to identify what plan could work best for you is to use the loan simulator.
“That can help you see what your payments would look like, what the monthly payment would be, what your total payment amount would be, [and] what kind of interest you'd pay in each of these different plans,” Wood explained.
She also said it’s important to keep your contact information up to date.
“They do not care if they have sent mail to an address where you no longer live or an email to an inbox that you can't get to anymore. As far as they're concerned, they've provided you that information. It's your job to get that info.”