President Donald Trump has implemented significant changes to student loan repayment options, effective July 1. The One Big Beautiful Bill Act introduces two new repayment plans while phasing out the former Savings on a Valuable Education (SAVE) plan. Federal borrowers previously enrolled in SAVE are now receiving notifications urging them to transition to new repayment plans within 90 days, though most can expect their monthly payments to increase.
Experts advise borrowers, particularly those still in the SAVE plan, to actively seek the most beneficial repayment options for their circumstances. Many borrowers have remained inactive, but this could lead to higher costs if they are automatically switched to standard repayment plans without prior analysis of their refinancing options.
The elimination of the SAVE plan followed prolonged legal challenges, and borrowers have enjoyed a payment freeze since July 2024, when payments were put into forbearance. However, interest has continued to accrue, resulting in a significant financial preference to change plans soon. Federal data indicates that around 7 million borrowers are still on the SAVE plan.
The Education Department’s 90-day notice system aims to transition borrowers away from the outdated SAVE plan. Those who ignore the notice could be transferred to a standard repayment plan, which, for many, may incur costly payments compared to potential income-driven repayment options.
Federal loan borrowers can explore several repayment strategies, including income-driven plans, standard repayment plans, and newly created options like the Repayment Assistance Plan (RAP). These strategies cater to borrowers’ different financial situations and long-term goals, particularly for those seeking Public Service Loan Forgiveness.
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