WASHINGTON – For millions of borrowers who signed up for the SAVE income-driven repayment plan specifically because it brought their monthly payments to zero, the clock on doing nothing about it just started. Loan servicers began sending exit notices this week to the first wave of affected borrowers, and for those who receive them in July, the window to act closes September 29.
The Saving on a Valuable Education plan, a Biden-era program that enrolled roughly 7.5 million borrowers before federal courts struck it down, is formally in wind-down. What some borrowers are now discovering is that “wind-down” and “your deadline” are not the same date. The Education Department said nearly three million borrowers are in the first wave of notifications. They have 90 days from when the notice arrives. Servicers are not reaching everyone at once.
“If you have not been paying attention to your loans for four, five, six years, totally understandable,” the legal director of Protect Borrowers, an advocacy organization, said in guidance published this month. “But now is the time to make sure your contact information is up to date.”
The notices follow more than a year of legal and administrative uncertainty. SAVE became unenforceable after a federal appeals court blocked the program last year, but the Education Department had not yet required borrowers to leave it. Interest that SAVE was designed to prevent from accruing had already resumed. Then the Trump administration reached a settlement with Missouri, one of the states that had challenged SAVE in court, formally ending the plan. Education Secretary Linda McMahon described the outcome as correcting what she called illegal generosity. “The Biden Administration’s illegal SAVE Plan would have cost taxpayers more than $342 billion over ten years,” McMahon said after the settlement. “We won’t tolerate it.”
The borrowers who face the sharpest adjustment are the 4.6 million who had been making $0 monthly payments. SAVE calculated monthly obligations based on income and family size; below a certain threshold, the formula produced a payment of zero, and the plan prevented balances from growing through unpaid interest. Both protections ended when the plan was blocked. Those borrowers are now accruing interest on their full balances while receiving notices that the option of inaction is becoming a formal deadline.
Borrowers who do not choose a new plan within 90 days of receiving their servicer notice will be automatically placed in the Standard Repayment Plan or the new Tiered Standard Repayment Plan. Both carry higher monthly payments than what SAVE enrollees were paying. For borrowers at the lower end of the income range who had been making $0 payments, the swing to a Standard Plan payment could exceed $300 per month, depending on their principal balance.
The available alternatives include the Repayment Assistance Plan, which launched July 1 and is designed as the primary replacement for income-driven options that SAVE’s demise leaves without a program. Under the RAP, monthly payments range from one to ten percent of a borrower’s income, with a minimum payment of ten dollars regardless of earnings. The Income-Based Repayment plan, which predates SAVE and survived the legal challenges that killed it, remains available for borrowers who took out their loans before July 1, 2026. Standard, Extended, and Graduated repayment plans are available for borrowers who do not qualify for income-driven options or prefer a fixed payoff schedule.
Two other income-driven plans, PAYE and the Income-Contingent Repayment plan, carry an additional complication. Borrowers who switch to them now must move again before July 1, 2028, when both are also scheduled to terminate. The Trump administration’s student loan overhaul has also introduced new caps on professional degree borrowing for fields including nursing and physician assistant programs, narrowing the range of options for borrowers in those fields who need to restructure their debt.
The notices are moving in waves through loan servicers, including Nelnet, MOHELA, Aidvantage, ECMC, and others, not through the Education Department directly. The timing of a given borrower’s notice determines when their 90-day window opens. A borrower notified in August faces a November deadline. A borrower notified in October faces a deadline that may not arrive until early 2027. The full sequence of waves is expected to run through March 2027. The federal student aid office has updated its loan simulator tool at studentaid.gov to allow borrowers to model switching costs before committing to a plan.
CBS News detailed the scope of the July 1 transition that launched the exit wave, noting that the wind-down affects borrowers across income levels but hits hardest those who had qualified for $0 payments under SAVE’s income calculations. Eastern Herald previously reported on the seven million borrowers facing repayment after SAVE’s collapse, ahead of the July 1 date that began the formal exit process.
What default rates will look like in the second half of 2026 and through 2027 is not yet measurable. Student loan defaults had already been rising before the SAVE wind-down began pushing borrowers toward plans with higher monthly costs. The population most likely to default is also the population SAVE was specifically designed to reach: borrowers with low incomes, large balances relative to their earnings, and limited room to absorb payment increases. The Institute for College Access and Success has warned that the transition out of SAVE puts borrowers at risk of losing credit they had accumulated toward eventual loan forgiveness, in addition to the payment increases that the new notices are making concrete.
The exits from SAVE will not all go smoothly. The question of how many of the nearly 7.5 million enrollees successfully navigate the switch, and how many end up in default or in plans that exceed their ability to pay, is not answered by the September 29 date on a first-wave notice. That answer will take until at least mid-2027 to emerge in the repayment data, long after this week’s notices have arrived and the 90-day windows have opened and closed.
