Starting July 1, about 7.5 million federal student loan borrowers enrolled in the SAVE repayment plan will begin receiving letters from their loan servicers with a blunt message: the plan they signed up for no longer exists, and they have 90 days to choose a replacement. Anyone who doesn’t respond will be automatically placed on the standard repayment plan, which for most borrowers produces the highest possible monthly payment.
For someone carrying $35,000 in student debt who was paying $0 under SAVE’s income-driven formula, that default switch could mean a bill of $350 or more per month, depending on their interest rate.
The U.S. Department of Education announced the wind-down in a June 2025 press release, calling SAVE “unlawful” and directing servicers to begin transitioning borrowers off the plan. SAVE had already been frozen by federal court injunctions since mid-2024, leaving millions of borrowers in administrative forbearance with no payments due but no progress toward loan forgiveness either.
A replacement program called the Repayment Assistance Plan, or RAP, is not scheduled to launch until July 2026. That leaves a full year in which borrowers must navigate existing repayment options with no direct substitute for the plan they lost.
The key dates borrowers need to know
July 1, 2025: Servicers begin mailing transition notices to all 7.5 million SAVE enrollees. Each servicer will set its own response deadline, but the Department of Education has guaranteed a minimum of 90 days from the date a borrower receives their letter.
August 1, 2025: Interest begins accruing on all affected loans again, according to a separate Department of Education statement. To be clear: interest has been accumulating on these balances throughout the forbearance period that began in mid-2024, but servicers were not billing borrowers or requiring payments. What changes on August 1 is that the billing pause ends and monthly payments can be required again.
After the 90-day window closes: Borrowers who have not selected a new plan will be auto-enrolled in standard repayment. Standard repayment amortizes the full loan balance over a fixed term, typically 10 years for Direct Loans, producing the largest monthly payment of any federal option. On a $40,000 balance at a 6% interest rate, that works out to roughly $444 per month. For borrowers who were paying little or nothing under SAVE, the jump will be severe.
July 1, 2026: The Repayment Assistance Plan is scheduled to take effect, authorized in recent legislation and described in House Report 119-106. RAP is intended to eventually replace SAVE as the primary income-driven option, but the Department has not yet published proposed regulations, and the July 2026 date remains a target rather than a certainty.
What borrowers lose beyond lower payments
Higher monthly bills are only part of the problem. The end of SAVE also freezes progress toward loan forgiveness for millions of people.
During the SAVE-related forbearance that began in mid-2024, qualifying payment counts toward both income-driven repayment (IDR) forgiveness and Public Service Loan Forgiveness (PSLF) have been paused. Borrowers who were years into a 10-year PSLF track or a 20- to 25-year IDR forgiveness timeline have seen their clocks stop. Every month spent in this forbearance is a month that does not count toward forgiveness. For someone who was within a year or two of the finish line, the lost time is not just frustrating; it is financially costly.
Forgiveness clocks only restart once a borrower enrolls in a qualifying repayment plan and begins making payments again. That makes the choice of a new plan doubly important: it determines both the monthly payment amount and whether forgiveness progress resumes.
The Department has indicated it is reviewing whether some forbearance months might be retroactively credited toward forgiveness, but no formal policy has been published as of June 2025. Borrowers should not assume those months will count until the Department confirms it in writing.
One important note: borrowers currently in SAVE-related forbearance are not considered delinquent or in default. Their credit reports should not reflect missed payments during this period. That protection, however, ends once the forbearance lifts and a new repayment plan kicks in.
Which repayment plans are still available
With SAVE gone, borrowers who need lower payments can choose from the remaining federal income-driven repayment plans. These plans apply only to Direct Loans; borrowers with older Federal Family Education Loan (FFEL) Program loans would need to consolidate into a Direct Consolidation Loan first to access most of these options.
- Income-Based Repayment (IBR): Caps payments at 10% of discretionary income for borrowers who first took out loans after July 1, 2014, or 15% for those who borrowed earlier. Forgiveness comes after 20 or 25 years, respectively.
- Pay As You Earn (PAYE): Caps payments at 10% of discretionary income with forgiveness after 20 years. Only available to borrowers who took out their first loans after October 2007 and received a disbursement after October 2011.
- Income-Contingent Repayment (ICR): Payments are the lesser of 20% of discretionary income or what you would pay on a fixed 12-year plan, adjusted for income. Forgiveness after 25 years. This is also the only income-driven plan available to Parent PLUS borrowers who consolidate.
Each plan uses a different formula for calculating discretionary income and sets different thresholds for the poverty-level exemption. The Department’s Loan Simulator tool on StudentAid.gov lets borrowers enter their own income and balance to compare estimated payments across all available plans. Given the compressed timeline, running those numbers now rather than waiting is worth the 15 minutes.
Lawmakers push back, but the Department stays quiet
A group of Democratic senators, including Sheldon Whitehouse, Jeff Merkley, Tim Kaine, and Elizabeth Warren, sent a letter to Education Secretary Linda McMahon demanding flexibility for borrowers forced off SAVE. Their concerns were specific: whether servicers have the staffing to handle millions of plan changes in a compressed window, whether borrowers will be guided toward affordable IDR plans rather than dumped into standard repayment by default, and whether documentation requirements can be eased for people already in financial hardship.
As of early June 2025, the Department has not publicly responded to the letter. That silence is itself a problem. Without clear guidance on how auto-enrollment will work, borrowers have no way to know whether the system will protect them or penalize them for inaction.
The Department has also not released demographic data on the 7.5 million affected borrowers, including income levels, average debt loads, or how many are already in financial distress. Without that information, it is impossible for outside analysts to estimate how many people will see their payments double or triple, or how many might qualify for hardship-based deferment. The sheer scale of the transition suggests servicer phone lines and processing systems will be strained, and borrowers who wait until the final days of their 90-day window may face significant delays.
What to do before your 90-day window runs out
The transition timeline is tight, but the steps borrowers need to take are straightforward.
1. Watch for your servicer’s notice. The 90-day clock starts when you receive it, not on July 1. If you are unsure who your servicer is, log in to StudentAid.gov and check your account. Make sure your mailing address, email, and phone number are current so the notice reaches you.
2. Run the numbers before you pick a plan. Use the federal Loan Simulator to compare what you would owe under IBR, PAYE, ICR, and standard repayment. If your income is low relative to your debt, an IDR plan will almost certainly cost less per month. If you are pursuing PSLF, confirm that the plan you choose qualifies.
3. Gather financial documentation now. If your income has dropped, you have lost a job, or you are facing medical or family expenses, pull together recent pay stubs, your most recent tax return, and any supporting paperwork before you contact your servicer. Having documents ready speeds up the process and strengthens any request for deferment, forbearance, or a lower IDR payment based on current income rather than last year’s tax return.
4. Do not let the deadline pass without acting. Auto-enrollment into standard repayment is the default for borrowers who do nothing. For someone with a $40,000 balance, that could mean jumping from a $0 or $50 SAVE payment to more than $400 per month. Choosing a plan, even temporarily, preserves your options and restarts your forgiveness clock.
5. Consider consolidation if you hold FFEL loans. Borrowers with older FFEL loans cannot enroll in most income-driven plans without first consolidating into a Direct Consolidation Loan. Consolidation resets forgiveness clocks, so weigh that trade-off carefully, but for borrowers who need access to IDR plans, it may be the only path.
The stretch between now and RAP’s scheduled July 2026 launch is the most precarious period for federal student loan borrowers in years. Interest is running, forgiveness progress only resumes once payments restart under a qualifying plan, and the window to act is short. Borrowers who move early will have the most options and the fewest surprises.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
