Key facts
- Starting July 1, over 7 million student-loan borrowers on the SAVE plan will be notified to select a new repayment plan.
- Failure to choose a new plan within 90 days will result in automatic enrollment in more expensive standard or tiered standard repayment plans.
- The new Repayment Assistance Plan is intended to be more affordable but is still more expensive than existing income-based plans.
- Democratic lawmakers have called for borrowers to be automatically enrolled in the cheapest available plan if they do not take action.
Beginning July 1, over 7 million student-loan borrowers enrolled in the SAVE plan will receive notices from the Department of Education with a deadline to transfer to a new repayment plan. If borrowers do not select a new plan within the provided 90-day timeframe, they will be automatically placed into either the standard repayment plan or the new tiered standard plan, both of which are expected to result in higher monthly payments.
The tiered standard plan, available after July 1, will require full repayment based on the principal balance, with a minimum monthly payment of $50. The new Repayment Assistance Plan will calculate payments based on adjusted gross income but is still considered more expensive than existing income-based repayment options. Some borrowers have indicated their payments are projected to increase significantly under these new plans.
In response to these changes, over 60 Democratic lawmakers have urged the Department of Education to automatically enroll all SAVE borrowers into the lowest-cost repayment plan available if they fail to take action before their deadline. Additional provisions from President Donald Trump's spending legislation, including new borrowing caps for advanced degrees and changes to parent borrowing limits, are also set to take effect.