Deadline for New Repayment Plan
Federal student loan borrowers enrolled in the former Saving on a Valuable Education (SAVE) repayment plan must decide on a new option by next week. Those who don’t may be shifted to a different plan automatically.
The first deadlines will hit borrowers on September 29, which is 90 days after notices were first sent out by federal loan servicers on July 1. However, this is not a single nationwide deadline. Borrowers received notices in waves and have a 90-day window from the date of their individual notice to select a new plan.
Due to a federal court order ending SAVE earlier this year, the plan is no longer available. According to the U.S. Department of Education, borrowers who do not choose a new repayment plan within the given period will automatically be placed into either the Standard Repayment Plan or the new Tiered Standard Plan.
“If you miss the 90-day window in your servicer notice, you can be automatically placed into the Standard or Tiered Standard Repayment Plan, where the payment is based on your loan balance rather than your income,” said Kaydee Ambas, consumer finance educational instructor at Earnest.
For those who preferred SAVE’s income-based payments, these default options might result in higher monthly bills. The automatic transition does not consider individual affordability.
Understanding Who is Affected
Borrowers who received notices at the start of July have until September 29 to switch plans. A borrower who got a notice on July 1, the day notifications started, reaches the deadline on September 29. Those with notices dated later will face deadlines in the coming months.
Loan servicers, like MOHELA, have different notification schedules, contacting borrowers in groups through October. Edfinancial sent its SAVE notifications between July 1 and August 15.
“With the first deadline approaching, borrowers should log in to their servicer account, confirm their specific date, and use the federal Loan Simulator to compare what IBR, RAP, and standard repayments would actually cost them each month,” said Ambas.
The Federal Student Aid repayment calculator helps borrowers compare eligible plans, showing estimated monthly payments and total repayments over time.
“The worst outcome is letting the deadline pass and discovering the government chose a payment you cannot comfortably afford,” Ambas warned.
Consequences of Missing the Deadline
Failure to act on the deadline means borrowers won’t remain under SAVE forever. Their servicers will transition them to a Standard Repayment Plan or a Tiered Standard Plan, contingent on their loan details.
For those with federal loans disbursed before July 1, 2026, the traditional Standard Plan involves fixing payments over 10 years. The new Tiered Standard Plan, available from July 1, offers repayment periods spanning 10, 15, 20, or 25 years, determined by the loan amount.
Exploring Repayment Options
John Wittelsberger, a certified financial planner focusing on education planning at Armstrong, Fleming & Moore, suggests the Standard Plan for borrowers seeking definitive payoff dates. This plan offers fixed payments and a clear repayment timeline, reducing interest compared to extended periods.
The Repayment Assistance Plan (RAP), which launched on July 1, determines payments based on adjusted gross income and dependents claimed. This option ranges from $10 monthly to 10 percent of the borrower’s adjusted gross income, reduced by $50 monthly per qualifying dependent. The repayment term can extend to 30 years.
“Used intentionally, it can preserve short-term flexibility and support parallel goals like investing, homeownership, or family planning,” Wittelsberger noted. “Though a smaller monthly payment results in a longer repayment period.”
Income-Based Repayment (IBR) might also be available. IBR payments are generally either 10 percent or 15 percent of discretionary income, capped at the amount under a 10-year Standard Plan. Remaining balances could be forgiven after 20 or 25 years, depending on circumstances. Plan eligibility relies partly on loan type and disbursement date.
Federal Student Aid advises borrowers to check their StudentAid.gov dashboard for loan details, affecting plan options.