Beginning July 1, millions of student loan borrowers will face decisions regarding their repayment options, as major changes are implemented by the Trump administration in the student loan system.
The existing Biden-era repayment plan, known as SAVE, is set to end. Approximately seven million individuals enrolled in SAVE, the most affordable income-driven plan, must select a new plan and resume payments. Payments have been paused for nearly two years due to legal challenges initiated by Republican attorneys general.
Federal loan servicers will begin notifying SAVE participants, detailing deadlines for action. They will be required to choose from a new set of repayment options, resulting from a tax and policy bill passed last summer.
The timing poses challenges for some borrowers, as inflation rises and utility, gas, and healthcare costs are increasing. Betsy Mayotte, president of The Institute of Student Loan Advisors, notes, “There’s a lot of anxiety out there. It’s not just about the student loan payments going up. It’s everything hitting at once.”
“It’s not just about the student loan payments going up. It’s everything hitting at once.”
While SAVE borrowers need to act quickly, other borrowers will also be affected. Two new repayment programs will be introduced, while several existing ones will phase out. Understanding these options can help borrowers manage their situation and plan effectively.
Monthly Payments Across Different Repayment Plans:
| Adjusted Gross Income | Standard 10-year | RAP | IBR (15%) | IBR (10%) | PAYE | ICR |
|---|---|---|---|---|---|---|
| $30,001 | $690 | $25 | $0 | $0 | $0 | $148 |
| $50,001 | $690 | $158 | $228 | $152 | $152 | $481 |
| $70,001 | $690 | $358 | $478 | $319 | $319 | $611 |
| $90,001 | $690 | $625 | $690 | $486 | $486 | $611 |
| $110,001 | $690 | $867 | $690 | $652 | $652 | $611 |
Note: Incomes shown end in $1 because the new RAP plan uses hard income cutoffs, where earning additional dollars can change repayment brackets.
The Pay As You Earn (PAYE) and the Income-Contingent Repayment (ICR) plans will be unavailable after July 2028.
Source: Analysis by Keith Collins from The New York Times.