SAVE plans end: Impact on your student loans

Recent updates to student loan repayment plans are resulting in significant changes that directly impact current and future federal student loan borrowers. The official closure of the Saving on a Valuable Education (SAVE) program brings important adjustments for those currently paying off or planning to take out student loans.

If you’re:

• Currently enrolled in a SAVE plan and need to stay informed about plan updates,
• Deciding on your repayment options following the completion of your educational program, or
• Considering federal student loans in the coming months (including Direct Subsidized, Unsubsidized, or revised PLUS loans)

it’s important to review how these updates and broader changes to student loan repayment policies could influence your options and long-term financial planning.

Background

The Eighth Circuit Court of Appeals has directed a district court to authorize a proposed settlement between the State of Missouri and President Donald Trump’s administration, officially ending the SAVE plan and concluding a months-long legal challenge. The SAVE plan, originally established under the previous presidential administration, provided federal student loan borrowers with the lowest monthly payment options available through any repayment program.

For the past year and a half, seven million borrowers enrolled in the SAVE plan have had payments paused while their loans were in forbearance, even though interest continued to accrue. With SAVE now coming to an end, affected borrowers must prepare to move into new repayment options as the landscape of student loan repayment plans shifts following the passage of the One Big Beautiful Bill Act (OBBBA). The Department of Education will offer further guidance regarding alternatives in the coming weeks.

What was the SAVE plan?

The Saving on a Valuable Education (SAVE) was an income-driven repayment program specifically designed to make federal student loan payments more manageable for borrowers. Under these plans, monthly payments were calculated based on a borrower’s income and family size, with key updates introducing strong protections to prevent interest from accumulating to unmanageable levels. Outstanding student loan balances could be forgiven after 20 years of payments for undergraduate loans and after 25 years for graduate or professional study. Additionally, the program provided accelerated loan forgiveness options for certain low-income borrowers, making repayment more attainable.

Borrowers enrolled in the SAVE plan were promised substantial relief, especially through a reduction in monthly payments on undergraduate loans, from 10% to 5% of discretionary income for those earning above 225% of the federal poverty line. Moreover, individuals earning less than approximately $33,000 would not be required to make payments as long as their income remained at that level, further enhancing the plan’s accessibility.

Originally, the SAVE plan was scheduled to sunset in 2028, providing borrowers additional time to consider their repayment options. However, with the SAVE plan now facing a more abrupt termination, roughly seven million borrowers are currently enrolled, and over 450,000 students and families who had considered using the plan for their educational expenses will need to assess and transition to alternative repayment strategies.

Despite these changes, some borrowers may still remain in forbearance during qualifying events. For example, individuals undergoing cancer treatment, those who are unemployed, or active-duty military members may continue progressing toward loan forgiveness under specific provisions.

Recent updates to student loan repayment plans

Under OBBBA, major student loan repayment changes are set to impact new and existing borrowers, starting in July 2026. The spending bill streamlines options to just two choices: the standard repayment plan and the new Repayment Assistance Plan (RAP).

The following reforms have been implemented, reversing several policies established under President Joe Biden’s administration:

• For new borrowers, only two repayment options are now available: a standard repayment plan and the new income-driven Repayment Assistance Plan (RAP) for federal student loans.
• The Income-Contingent Repayment (ICR) plan, which previously calculated monthly payments as either a fixed amount or 20% of discretionary income divided over 12 months, will be discontinued.
• Updates to Income-Based Repayment (IBR) requirements now allow existing borrowers, including those without partial financial hardship and those with consolidated Parent PLUS Loans, to benefit from revised terms.

Standard repayment plans require student borrowers to make fixed payments over 10 to 25 years, while the new RAP will enable borrowers to pay between 1% and 10% of their income monthly for up to 30 years.

These changes coincide with significant reforms to undergraduate and graduate borrowing limits, as well as the elimination of the Graduate PLUS loan. Other notable updates include:

• The RAP Plan allows married couples filing jointly to make payments based on their individual share of debt, rather than solely on combined household income.
• Borrowers with defaulted federal student loans now have a second chance to rehabilitate their loans, offering expanded protections.
• However, unemployment and economic hardship deferments will be gradually phased out, and the maximum period for general forbearance will be reduced from three years to nine months within any 24-month period.
• The bill introduces stricter monthly payment deadline requirements for all federal student loan borrowers.

While OBBBA narrows certain repayment and forbearance options, these updates also provide enhanced support for borrowers in default.

How to choose a new repayment plan

With the July 2026 deadline to select a new program approaching, millions of borrowers will need to decide their next moves quickly. Kaydee Ambas, consumer finance professional at Earnest, outlined these steps in Yahoo Finance:

1. Log directly into your student loan servicer account (Neltnet, MOHELA, Edfinancial, etc.).
2. Use the federal loan simulator to compare different IDR plans.
3. Submit an application for your preferred plan as soon as possible.

Ambas says: “The upcoming Repayment Assistance Plan will not replicate SAVE’s affordability, so early preparation matters.” Those who do not select a plan before July are likely to be assigned to a higher-cost standard plan, so it’s important to plan ahead. Given the sheer number of borrowers under SAVE, the risk of the application system being overwhelmed is high: the sooner borrowers submit their applications, the better.

Borrowers with stable income and good credit scores could also consider refinancing their student loans with a private lender to secure more favorable terms. However, refinancing will also mean forfeiting protections like Public Service Loan Forgiveness (PSLF) and income-driven repayment options.

General tips for lowering college costs

If you’re preparing to enter college or graduate school soon and want to know how to reduce college costs, or if you’re a current student reassessing your financial plan, consider these proven strategies to help lower your net price and manage college expenses effectively:

1. Set a realistic maximum for how much you and your family can contribute out-of-pocket each year, and determine the upper limit you’re willing to borrow in student loans.
   1. Use these figures as benchmarks when reviewing your admission decisions and financial aid offers to ensure you’re minimizing debt and maximizing your return on investment.
2. Consider all possible expenses, including tuition, living costs, books, and fees, and explore all available financing options. Creating a detailed budget is a must for keeping college costs under control.
3. Submit your Free Application for Federal Student Aid (FAFSA) and, if required, the CSS Profile (primarily used by private colleges to determine need-based grants) before deadlines. Completing these forms promptly increases your chances of qualifying for federal and institutional aid.
   1. IMPORTANT: You must renew your FAFSA each year to continue receiving federal financial aid. Institutional and grant aid requirements may differ by school, so be sure to check if you’ll need to update your CSS Profile annually as well.
   2. The optimal time to file your FAFSA is in October, as soon as the application window opens for the upcoming academic year.
4. Review your eligibility for federal programs such as Pell Grants and other income-based plans, which are designed to reduce overall costs for eligible students.
5. Explore affordable in-state public universities, which often provide excellent education and research opportunities at a lower cost compared to private institutions.
6. Research private colleges that offer substantial need-based or generous, merit-based financial aid packages.
7. Consider starting at a two-year community college. This option allows you to complete general education requirements with lower tuition costs before transferring to a four-year school.
   1. Look into dual enrollment programs offered by some high schools, enabling juniors and seniors to take college-level courses, often free of charge, and earn credits that count toward both high school and college graduation.
8. If you’re still in high school, register for AP courses. Achieving high scores on AP exams may earn you college credit or advanced standing, potentially shortening your time in college and reducing total costs. AP exams cost $99 each, but some students may qualify for waivers.
9. Strive for strong scores on standardized tests such as the ACT, SAT, or CLT. High scores can lead to merit-based scholarships that help further reduce college expenses.
10. Apply for external scholarships from nonprofit organizations and search for state- or community-funded opportunities, all of which contribute to lowering your overall college costs.
11. Avoid private student loans whenever possible, as they often come with higher interest rates and fewer borrower protections compared to federal loans.

Planning ahead and making informed decisions are crucial steps toward managing expenses for both undergraduate and graduate studies. With careful preparation and the right strategies, paying for college becomes much more manageable and less financially overwhelming.

The bottom line

Updates to student loan repayment policies are bringing significant changes that affect millions of borrowers enrolled in discounted monthly payment plans granted by President Biden. With the SAVE plan set to expire, students now have less than four months to evaluate their options and apply for a new income-driven repayment plan. These updated plans offer lower monthly costs than traditional standard repayment plans, providing a practical way to reduce college costs and manage educational debt responsibly.

If you’re a student or recent graduate, stay informed: taking proactive steps now will help ensure your student loans remain manageable and allow you to pay off your debt efficiently.