Key facts
- President Donald Trump's student-loan overhaul takes effect July 1.
- Borrowers on the SAVE plan have 90 days after receiving an email to select a new repayment plan.
- Failure to select a new plan will result in placement into the standard repayment plan.
- New repayment plans and borrowing caps are also set to take effect on July 1.
- Ongoing litigation challenges some of these changes, including the transition off the SAVE plan.
President Donald Trump's administration is implementing significant changes to student-loan repayment, with a new overhaul set to take effect on July 1. While this date marks the beginning of these changes, it is not a deadline for all borrowers to act. For the approximately 7 million borrowers enrolled in the SAVE repayment plan, July 1 signifies the start of a transition period.
The Education Department has advised these borrowers to switch to a new repayment plan. However, switching before July 1 is not mandatory. Starting July 1, the department will begin emailing SAVE borrowers, outlining their specific timelines for transitioning to a new plan. Upon receiving this notification, borrowers will have a 90-day window to choose a new plan. If a borrower fails to select a new plan by the end of this period, they will be automatically enrolled in the standard repayment plan, which typically results in higher monthly payments.
Reports indicate that hundreds of thousands of borrowers have already proactively switched plans. The department has also stated in court filings that due to a phased rollout, some borrowers may receive even more time beyond the earliest potential transition deadline of September 29. Beyond the SAVE plan adjustments, the July 1 overhaul also introduces new repayment plans and borrowing caps, which are expected to increase monthly bills for some borrowers.
However, the implementation of some changes faces legal challenges. A lawsuit filed in March seeks to prevent the forced transition of borrowers off the SAVE plan. Additionally, a federal judge has temporarily blocked the department's revised definition for professional degree borrowing limits, which was also slated to take effect July 1.