Education Department sets deadline for student loan borrowers to get out of SAVE Plan

The Education Department announced Friday that student loan borrowers will have to get out of the Biden-era Saving on a Valuable Education (SAVE) Plan by the end of the summer.  

More than 7.5 million borrowers are still in the SAVE Plan after a court officially terminated what had been called the most generous student loan repayment option available.  

On July 1, borrowers will be notified they have 90 days to switch out of the SAVE Plan to another option, or they will be automatically put into one of two new student loan repayment plans. 

“Today’s guidance, which every borrower enrolled in the defunct SAVE Plan will receive over the next week, puts the Biden Administration’s illegal student loan bailout agenda to rest once and for all,” Under Secretary of Education Nicholas Kent said.   

“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. Borrowers currently enrolled in the illegal SAVE Plan will be given at least 90 days to enter a legal repayment plan of their choice, including the new Repayment Assistance Plan, which will launch on July 1,” Kent added.  

Borrowers who do not switch will get put into the standard repayment plan or the new Tier Standard Plan. Either move could shift borrowers from paying $0 a month to hundreds of dollars.  

The notifications will come out the same time the new Repayment Assistance Plan (RAP) or new Tiered Standard Plan are released. Under RAP, payments will be based on a person’s income and number of dependents. The Tiered Standard Plan will give fixed terms for borrowers with timelines between 10 years and 25 years to repay.  

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