The introduction of the Saving On a Valuable Education (SAVE) income-driven repayment plan was a major help for consumers with federal student debt. Not only did SAVE raise the income threshold for $0 monthly payments so more borrowers could qualify, but it based monthly payments for undergraduate loans on just 5% of discretionary income (instead of the 10% or more required by other income-driven plans). While the plan wasn’t perfect, it paved the way for lower (or $0) monthly payments for millions of borrowers.
Unfortunately, the SAVE plan is going to end, whether through a court ruling, or through the proposed changes to repayment plans currently being negotiated in Congress.
This means consumers who had planned on repaying federal student loans with the SAVE plan will need to change course completely in the coming year. But when? And what options will be available? Some of it is still unknown, but you can start planning today.
When Will Monthly Payments Resume for SAVE Borrowers?
The good news for those who signed up for the SAVE income-driven repayment plan is that there’s no hurry to make a move. Borrowers with federal student loans on SAVE are currently in forbearance, according to the U.S. Department of Education. This means monthly payments are not due, and that interest isn’t accruing on loan balances.
When will payments resume for SAVE borrowers? That’s the million dollar question, although nobody knows the exact answer at the moment. There are several estimated timelines for when SAVE borrowers will need to resume payments, and most point to 2026.
The Dept. of Education website says monthly payments for borrowers who signed up for the SAVE plan will resume in the fall, but the latest push of forbearance dates suggest that it would be December at the earliest, if at all in 2025. A more likely scenario is early to mid 2026.
Either way, SAVE borrowers have some time right now to figure out what to do.
What SAVE Borrowers Should Do Next
With interest not accruing on loans due to the current forbearance, most SAVE borrowers may be fine waiting to see what happens in the coming months. Since monthly payments are paused through late-2025 and potentially into 2026, it can also make sense to start building savings or to cut spending to prepare for the student loan payments that will eventually come due.
However, the current forbearance for SAVE means that these months that won’t directly count toward Public Service Loan Forgiveness (PSLF) if that’s a path you’re pursuing. This means borrowers who are hoping to have their balances forgiven through work in public service may want to move faster to get back on track.
PSLF buyback is an option, but as the latest status report from the Department of Education shows, the timeframe is months and the backlog is growing.
Borrowers on SAVE have the option to apply for other income-driven repayment plans for federal student loans.These options include Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans. And yes, the Dept. of Education has the applications open for these programs online again after a brief hiatus.
According to Carey Donaldson, founder of NewBeginnings Spokane (a student loan financial literacy and advocacy organization), borrowers picking a new repayment plan should expect increased monthly payments compared to what they were planning with SAVE. After all, remaining income-driven plans base monthly payments on a minimum of 10% of discretionary income (or more), or at least twice as much as the SAVE plan required for monthly payments on undergraduate student loans.
Donaldson points to the current administration’s stance on student loans as an indication that the “pendulum is swinging in the opposite direction” from previous years. Where borrowers could skip payments on federal student loans without major consequences since the initial Covid-19 payment pause in 2020, standard rules for student loan repayment have been reinstated, she says.
This means you should make sure you don’t let your loans fall into delinquency or default, no matter what. If you do, you can face a range of penalties for your loans and your credit, including late payments being reported to the credit bureaus and the potential for wage garnishment.
What should borrowers do? Carey says consumers with federal student loans should plan ahead knowing they will need to get back into the routine of repayment after five years of having the opportunity to put it off. This means borrowers should add student loan payments back into their monthly budgets and expect monthly payments to be higher than previous years.
“Repayment is upon us and the consequences of non-payment have returned, but default and delinquency do not have to be the ending to the story,” she says.
More Changes Potentially Coming to Federal Student Loans
Borrowers on SAVE trying to figure out what to do now should also keep an eye out for new changes to federal student loans that may be on the way. Financial planner Hailey Melander Crimmins of Wealth Enhancement Group points out the Trump administration’s proposed restructuring of federal student loans as a sign that SAVE borrowers may need to brace themselves for what’s to come.
Congress has proposed ending all current income-driven repayment plans for federal student loans and replacing them with a new IDR plan called the Repayment Assistance Plan, or RAP. While the new plan (as proposed) would lead to loan forgiveness of remaining balances after 30 years, it would require higher monthly payments all along. Of course, a standard repayment plan would also be offered for those who want to pay down student debt faster, but even the standard plan is different for future borrowers.
The administration is also proposing an end to Grad PLUS loans and eliminating Public Service Loan Forgiveness (PSLF) eligibility for medical and dental residents.
Also, many tax provisions for student loan forgiveness are ending. This means some borrowers who have debt forgiven in the future could face a student loan forgiveness tax bomb they aren’t prepared to deal with.
“The significance of these changes overall are longer repayment and forgiveness periods, restricted eligibility, higher monthly payments, and taxation of forgiveness or discharge,” says Crimmins. “We can’t be sure that these changes will pass, but they reflect the priorities of the current administration.”
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