Student loan servicers have started notifying borrowers they have 90 days to exit the SAVE repayment plan, a Biden administration income-driven program designed to lower monthly payments for struggling borrowers. The countdown reflects ongoing uncertainty over the plan's future as political leadership changes.
The SAVE plan capped monthly payments at 10 percent of discretionary income for undergraduate borrowers, with payments as low as $0 for those earning under 225 percent of the federal poverty line. The program also allowed interest to stop accruing on payments, protecting borrowers from loan growth even when payments fell short of interest charges. Roughly 8 million borrowers currently rely on SAVE.
The 90-day window gives borrowers time to select an alternative repayment plan before SAVE faces potential elimination or restructuring. Those who do nothing will be moved to a standard 10-year repayment schedule, which could mean significantly higher monthly payments. For example, a borrower paying $50 monthly under SAVE might face payments of $300 or more under the standard plan.
Borrowers have several options. They can switch to income-contingent repayment, income-based repayment (IBR), or pay-as-you-earn (PAYE) plans. These alternatives also tie payments to income but typically offer less generous terms than SAVE. Some borrowers may qualify for Public Service Loan Forgiveness if they work in government or nonprofit roles and continue making payments.
Those with federal loans should log into their servicer's website or contact their loan servicer directly to review options before the deadline. Borrowers should calculate what their payments would be under each plan before deciding. Federal Student Aid offers a Repayment Estimator tool to compare monthly payment amounts across plans.
The 90-day period creates a window for borrowers to act strategically.