The US Department of Education has begun notifying over 7 million student-loan borrowers that the SAVE income-driven repayment plan has ended. In emails sent from March 27, the department instructed borrowers to prepare to select a new repayment plan and restart their monthly payments.
The SAVE plan, introduced by the Biden administration, offered reduced monthly payments and a faster path to loan forgiveness. It was blocked by legal challenges in July 2024, and a subsequent federal court settlement required its termination earlier than the 2028 phase-out planned under former President Donald Trump's spending legislation.
Immediate Action Required
The department's email, with the subject line "Action Required: The SAVE Plan has ended, and you must select a new repayment plan," urges borrowers not to wait for further contact. It outlines five reasons to switch plans immediately, though the specific reasons were not detailed in the reviewed correspondence.
Borrowers' loan servicers will begin contacting them with specific deadlines starting July 1. Borrowers will then have a 90-day window to restart payments. "ED and your loan servicer will provide details about which repayment plan you will be moved to if you don’t choose a plan by the deadline set by your servicer," the email stated.
Transition to New Repayment Options
Borrowers who do not actively choose a new plan will be automatically enrolled in one. From July, the primary options will be a standard repayment plan or the new Repayment Assistance Plan (RAP).
The RAP calculates payments based on income and offers forgiveness after 30 years, but it is considered less generous than the income-driven repayment plans it replaces, which are being eliminated under the Trump-era legislation.
Borrower Uncertainty Persists
Several borrowers who received the Department of Education email told Business Insider they have not yet been contacted by their loan servicers with specific instructions or deadlines for the transition. This gap in communication has created uncertainty for millions facing the prospect of higher monthly payments years earlier than initially anticipated under the SAVE plan's original structure.