Borrowers who were part of the discontinued Saving on a Valuable Education (SAVE) repayment plan face important deadlines to select a new repayment option. They must act promptly to avoid automatic enrollment in another plan.
Deadline Details
Some SAVE borrowers need to decide by September 29. This deadline marks 90 days after loan servicers began reaching out to borrowers on July 1. However, the September date is not universal. Borrowers are contacted in different waves, each having 90 days from their notice. The SAVE plan was terminated after a federal court decision.
The U.S. Department of Education states that if borrowers do not select a repayment plan within the specified window, they will be automatically placed in the Standard Repayment Plan or a new Tiered Standard Plan. Other repayment options do exist if borrowers make a choice.
Kaydee Ambas from Earnest explained, “If you miss the 90-day window in your servicer notice, you can be automatically placed into the Standard or Tiered Standard Repayment Plan, where the payment is based on your loan balance rather than your income.” This switch can result in higher monthly bills, departing from income-based payments that many found manageable under SAVE.
Who Does the Deadline Apply to?
Borrowers receiving notices from servicers at the start of July must decide soon. Notices dated July 1 mean a deadline on September 29. Those contacted later could have deadlines extending into future months.
Loan servicers, like MOHELA and Edfinancial, employ different schedules to notify borrowers. MOHELA is reaching out from July through October. Edfinancial sent notifications between July 1 and August 15.
Ambas advised, “With the first deadline approaching, borrowers should log in to their servicer account, confirm their specific date, and use the federal Loan Simulator to compare what IBR, RAP, and standard repayment would actually cost them each month.” The Federal Student Aid repayment calculator offers comparisons of eligible plans, showing estimated monthly payments and total repayment amounts.
Ambas emphasized the risk of missing the deadline, stating, “The worst outcome is letting the deadline pass and discovering the government chose a payment you cannot comfortably afford.”
If No Action is Taken
Failing to choose a repayment plan results in automatic assignment to a Standard or Tiered Standard Plan. Those with loans disbursed before July 1, 2026, will find themselves under the regular Standard Plan, with fixed payments for a 10-year term. The new Tiered Standard Plan, effective July 1, offers repayment terms of 10, 15, 20, or 25 years, contingent on the loan amount.
Available Options
John Wittelsberger, certified financial planner at Armstrong, Fleming & Moore, noted that for certain borrowers, the Standard Plan is suitable if the larger payments are affordable and an end date is desired. “The standard repayment plan works exactly as it sounds. Payments are fixed, the payoff timeline is clearly defined, and the loan balance steadily declines toward a known endpoint,” he stated.
Higher earners might appreciate this approach, as it can limit interest compared to elongated repayment periods.
The new Repayment Assistance Plan (RAP), effective July 1, bases payments on adjusted gross income and dependent numbers. Payments range from a $10 minimum to 10% of adjusted gross income, adjusted by $50 per dependent. Repayment can extend to 30 years. Wittelsberger suggested that RAP affords flexibility for fluctuating expenses, career shifts, or uneven incomes. “Used intentionally, it can preserve short-term flexibility and support parallel goals like investing, homeownership or family planning,” he added. Yet, smaller payments mean a longer repayment duration.
Income-Based Repayment (IBR) offers another option. It usually requires 10% or 15% of discretionary income, with caps at what a 10-year Standard Plan would demand. Debt forgiveness is possible after 20 or 25 years of qualifying payments. Eligibility depends on loan type and disbursement date. Borrowers should confirm their loan details on the StudentAid.gov dashboard, as these influence their repayment plan options.
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