Your Student Loan SAVE Plan Has Less Than 3 Months Left -- Here's What To Do Next
Millions of federal student loan borrowers should brace for impact, as they’re about to face a major change.
Loan servicers have begun notifying borrowers enrolled in former President Joe Biden's administration’s Saving on a Valuable Education (SAVE) plan that they now have 90 days to choose a new repayment option following the program’s termination, per CNBC.
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While the timeline won’t be the same for everyone, waiting until the last minute could leave you with a significantly higher payment than necessary. Here’s what you need to do before the SAVE plan winds down.
Don’t Fall Behind
“First, do not panic and do not ignore it,” said Jethro Adedeji, founder and CEO of Crowned Credit. “When a repayment plan winds down, the borrowers who get hurt are the ones who go silent and accidentally fall behind during the shuffle."
While the earliest deadline to leave SAVE is Sept. 29, not every borrower will receive their notification at the time. Loan servicers are sending notices in waves, meaning some borrowers may not hear from their servicer until later this year, or even by early 2027.
Still, that’s no reason to wait. Borrowers can log into their account at StudentAid.gov whenever they want to review repayment options and begin the process of switching plans.
According to Adedeji, "The single most important thing you can do right now is stay in contact with your loan servicer and confirm what happens to your payment, your due date and your plan when the change takes effect.”
Know the Consequences of Doing Nothing
“As SAVE ends, borrowers will need to choose or be placed into another repayment option,” Adedeji said. “Do not just accept whatever payment shows up.”
Ignoring the deadline doesn’t mean your loans will stay in SAVE. Borrowers who don’t select a new repayment plan within their 90-day window will automatically be placed into either the Standard Repayment Plan or the new Tiered Standard Plan that became available July 1.
For many borrowers, those plans could result in much higher monthly payments than income-driven options. Also, while it’s still possible to switch plans later, you’ll have to submit another application, and you may end up paying more in the meantime.
Borrowers who stop making payments altogether after leaving SAVE could also see their loans become delinquent. After 270 days of missed payments, federal loans typically enter default, leading to collections, wage garnishment and intercepted tax refunds.
Understand and Compare Your Income-Driven Options
“Compare the plans available to you and pick the one whose monthly payment you can realistically sustain, because an affordable payment you actually make beats a lower payment you fall behind on,” Adedeji said.
The best replacement plan depends on factors like your income, family size and loan balance. One new option, for example, is the Repayment Assistance Plan (RAP). In RAP, monthly payments generally range from 1% to 10% of a borrower’s earnings, with a minimum payment of $10.
Many borrowers will also be eligible for Income-Based Repayment (IBR). Depending on when your loans were issued, IBR generally requires payments equal to 10% or 15% of discretionary income and can lead to loan forgiveness after 20 or 25 years.
Run the Numbers
The end of SAVE doesn’t necessarily mean you’ll pay dramatically more each month, but it does mean you’ll need to actively choose what comes next. This is where you’ll need to be careful.
Federal repayment calculators can estimate your monthly payment under each available plan, making it easier to compare your options before your deadline arrives. Spending just a few minutes reviewing those estimates now can help you avoid an automatic enrollment into a more expensive repayment plan and keep your student loan payments aligned with your budget.
“If the numbers genuinely do not work, raise your hand early,” Adedji concluded. “Ask about hardship options, deferment or a lower-cost plan before you miss a payment, not after. Your options are always wider while you are current … The policy is shifting, but your job is simple: Stay current and stay informed.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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