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The U.S. Department of Education is moving to dismantle a Biden-era student loan repayment program, warning millions of borrowers they must switch plans or risk being placed into a more expensive option.
More than 7 million borrowers enrolled in the Saving on a Valuable Education plan, known as SAVE, will receive notices beginning Friday urging them to choose a different federal repayment plan. Those who fail to act within a set timeframe will be automatically transferred to the standard repayment plan, which features fixed payments over 10 years and typically higher monthly costs.
Nearly half of SAVE enrollees qualify for zero-dollar monthly payments due to low incomes, making the potential shift a significant financial change for many households.
Timeline for transition
The Education Department said it will begin emailing borrowers immediately, followed by notices from loan servicers in July that will give recipients 90 days to switch plans.
Officials said the notices will be staggered to manage the volume of borrowers exiting the program.
In a statement, Under Secretary of Education Nicholas Kent said the administration is seeking to simplify repayment.
“For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration’s policy is simple: if you take out a loan, you must pay it back,” Kent said.
Legal battles end program
The SAVE plan was introduced in 2023 under former President Joe Biden as part of a broader effort to reduce monthly payments and expand loan forgiveness.
But the program quickly faced legal challenges from Republican-led states. A settlement reached under President Donald Trump aimed to end the program, and a subsequent ruling by the U.S. Court of Appeals for the 8th Circuit effectively halted SAVE after a lower court had dismissed the case.
The prolonged legal fight left millions of borrowers in limbo, with payments paused for nearly two years under administrative forbearance.
Borrowers face uncertainty
Consumer advocates say the administration’s approach places too much responsibility on borrowers to navigate a complicated system under tight deadlines.
Abby Shafroth of the National Consumer Law Center said the department could have automatically transitioned borrowers into more affordable plans.
“Instead it’s leaving people to fend for themselves in the midst of a deepening affordability crisis,” she said.
Complicating the transition, many borrowers who previously applied for alternative income-driven repayment plans remain stuck in processing backlogs, with some applications pending for months.
System strain and backlog
The Education Department acknowledged delays tied to the SAVE litigation, which led to hundreds of thousands of applications being rejected or stalled.
Officials said loan servicers are now processing roughly 250,000 applications per month and have updated forms to exclude the SAVE plan. Borrowers caught in the backlog have been advised to reapply.
Even those automatically placed into the standard plan will still be able to switch to other repayment options later, the department said.
Future of repayment plans
The transition comes amid broader changes to the federal student loan system.
Beginning this July, borrowers will have access to a new income-driven option, the Repayment Assistance Plan, which ties monthly payments to income levels. However, many borrowers are still expected to pay more than they would under SAVE.
Further changes are ahead: most existing income-driven repayment plans are scheduled to be phased out by July 2028 under a tax law signed by Trump.
Advocates had hoped SAVE borrowers would be allowed to remain in the program until that deadline, but the administration has moved to accelerate its end.
What comes next
With millions of borrowers required to act within months, the transition away from SAVE is expected to test both the federal loan system and borrowers’ ability to adapt — with significant financial consequences for those who do not.
