Student Loan Repayment Plans Are Being Overhauled— Here’s What Borrowers Need to Know
The SAVE plan ends July 1, triggering a 90-day scramble for millions still enrolled.
The US student loan repayment system is heading into one of its biggest shake-ups in years, with sweeping student loan changes taking effect on July 1 that will reshape how millions of Americans pay down their debt.
The overhaul stems from two forces converging at once: the Trump administration's One Big Beautiful Bill Act, signed into law last summer, and a federal appeals court ruling that sealed the fate of the Biden-era SAVE plan. Together, they're pushing borrowers toward stricter payment timelines and slimmer forgiveness options, the latest in a string of disruptions to hit the student loan system in just a few years.
"This is impacting, in my opinion, every single student loan borrower in one way or another, even if you don't have to make a change in your loans, just the confusion alone," said Natalia Abrams, president of the Student Debt Crisis Center. "I've worked in this space for more than 15 years, and I've never seen it this bad, and I've never seen it change this much, this frequently."
Here's a breakdown of what's changing and how it affects borrowers trying to navigate the new income-driven repayment landscape.
What’s Actually Changing on July 1
More than 7 million Americans are currently enrolled in the SAVE plan, the income-based repayment option the Biden administration launched in 2023. SAVE was designed to slash undergraduate loan payments, in some cases down to $0 a month, while offering early forgiveness for borrowers with smaller balances.
That plan is now being dismantled. After a federal appeals court ruling in March, following a legal challenge from Republican attorneys general who argued SAVE exceeded the Department of Education's authority, the plan will officially end on July 1. Monthly payments, which had been paused for years while the case worked through the courts, will resume, and SAVE borrowers will need to move onto a different plan.
What Repayment Options Are Left
Once SAVE is gone, affected borrowers get a 90-day window to pick a new plan. Those with loans issued before July 1, 2026, who don't plan to borrow again, can still access several existing income-driven and fixed-payment plans, though all of them push faster repayment and offer fewer forgiveness pathways than what SAVE provided.
The surviving income-driven repayment options include Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR), each of which calculates payments based on a borrower's discretionary income and forgives remaining balances after 20 to 25 years. PAYE and ICR aren't long-term safe harbors either: both are scheduled to be phased out entirely by the summer of 2028.
Borrowers who don't actively choose a new plan within the 90-day window face automatic enrollment in a fixed-payment plan, most of which carry no forgiveness option at all. Because the standard fixed plan is built to pay off the loan within 10 years, those monthly bills tend to run noticeably higher than under any income-based loans formula. Two other fixed-payment options offer lower or gradually escalating payments stretched over a longer term, but still without the forgiveness safety net SAVE once offered.
A new option, the Repayment Assistance Plan, also opens on July 1. It calculates payments as 1% to 10% of income, waives unpaid interest each month, and forgives remaining balances after 30 years, a notably longer timeline than what most borrowers had grown used to under SAVE.
Why the Administration Is Making This Change Now
The Department of Education has framed the overhaul as a simplification, not a rollback. "For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump administration's policy is simple: if you take out a loan, you must pay it back," Nicholas Kent, the department's under-secretary of education, said in a statement earlier this year.
It marks a sharp reversal from the Biden administration's approach, which at one point attempted to cancel $430 billion in student debt before the Supreme Court blocked the plan in 2023.
Borrower advocates argue the new menu of student loan repayment plans is less generous across the board and could make college meaningfully less affordable for the next generation of students, even as the government frames the changes as a streamlining of a system that had become too complicated to administer.
What Borrowers Should Do Now
Anyone currently on SAVE should expect a notice from their loan servicer once the July 1 deadline passes, kicking off the 90-day countdown to select a new plan. Borrowers anxious about defaulting on the income-driven repayment options that remain, IBR, PAYE, or ICR, may want to apply before the deadline rather than risk being defaulted into a fixed plan with a higher monthly bill and no forgiveness path.