U.S. student-loan borrowers face repayment shift as SAVE exits and deadlines near

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Student-loan repayment changes

Highlights

1.5 million of 7.5 million borrowers in the SAVE repayment plan have switched to new plans, aiming to retain discharge and forgiveness benefits.
SAVE borrowers must switch plans within 90 days of notification or move to a standard plan with highest payments, with the first deadline on September 29.
Billing errors and delinquency notices arise as borrowers exit SAVE, while a pending lawsuit by Public Goods Practice seeks to halt the forced transfer process.

Deadline timeline and borrower transition

As first reported by Business Insider, a Department of Education spokesperson says 1.5 million of the 7.5 million borrowers enrolled in SAVE have selected a new repayment plan as of Monday morning. The spokesperson says that change allows borrowers to keep making progress on reducing balances and to access discharge benefits that current SAVE participants are not receiving.

SAVE was a Biden-era repayment plan that offered lower monthly payments and a shorter path to debt relief. The Trump administration eliminates the plan this spring, and since July 1 loan servicers start notifying enrolled borrowers that they have 90 days to switch plans or be placed into a standard repayment option with the highest payments.

The first 90-day deadline arrives on September 29 for the earliest group of borrowers. Servicers say they expect to send notices to all SAVE borrowers by the end of 2026, while some borrowers report they are waiting for those notices before making a decision.

Payment errors and wider impact

About 80% of SAVE borrowers still remain in the plan, highlighting the scale of the administrative shift across the federal student-loan system. Some borrowers move off SAVE before receiving notice so they can resume earning credit toward forgiveness through income-driven repayment plans or Public Service Loan Forgiveness for government and nonprofit workers.

The Education Department does not comment on how quickly borrowers who miss their deadline are moved to a standard plan or how they are notified of that transition. At the same time, borrowers who already switch report billing glitches, including incorrect payment amounts and delinquency notices that they say are inaccurate.

The department says it is aware of the errors and resolves them, but the problems still leave some borrowers unsure about what they owe and make budgeting harder. A separate lawsuit also seeks to halt the forced transfer of SAVE borrowers, after Public Goods Practice files a motion in June to block the process and the judge has yet to rule.

Our earlier article on Fitch’s review of Academic Loan Funding Trust (ALFT) securitizations explained how these deals are backed by U.S. federal student loans and supported by FFELP guarantees and Department of Education reinsurance. It also noted that while the 2011-1 and 2012-1 trusts kept stable outlooks, the 2013-1 trust stayed under negative outlook due to rising-rate pressure on excess spread and stress-test performance.

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