Key Updates on the SAVE Plan Wind-Down
The Department of Education has released official guidance on how the SAVE plan will be phased out following recent court rulings.
Starting July 1, borrowers will have a 90-day window to select a new repayment plan. If no action is taken, they will be moved into a standard repayment plan. Here’s what you need to know.
Who is impacted?
This applies to borrowers currently in the SAVE forbearance. If you’re already on a different repayment plan, this does not affect you.
What’s the timeline?
You can switch plans now if you’d like. However, the official 90-day window begins July 1. The Department of Education has indicated that borrowers will receive individualized notices after that date with specific deadlines.
Should you act now or wait?
Income and tax timing will be key factors. Because borrowers will not be automatically transitioned into another IDR plan, everyone will need to recertify income when applying for a new plan within the next six months.
- If your income increased significantly from 2024 to 2025 and you haven’t filed your 2025 taxes yet, you may want to use your 2024 income to secure a lower payment. In that case, consider switching plans soon or filing a tax extension. Just be sure to pay any taxes owed by April 15.
- If you’re considering the RAP plan, it isn’t available yet. You’ll need to wait until July. Again, a tax extension may be helpful.
What are your options?
- Wait for the RAP plan (available July 1)
For borrowers earning over $100K, RAP payments are typically about $200/month higher than New IBR or PAYE. However, RAP offers strong interest subsidies for those whose payments don’t cover accruing interest. There’s no payment cap and forgiveness is extended to 30 years. - Switch to Original IBR
Most borrowers now qualify. This plan uses a 150% poverty deduction, 15% payment calculation, and offers forgiveness after 25 years. - Switch to New IBR
Offers a 10% payment, a payment cap, and 20-year forgiveness. However, it’s only available to “new borrowers” (no outstanding balance as of July 1, 2014). - Use PAYE (short-term strategy)
PAYE mirrors New IBR in many ways, but all borrowers will be forced out by July 1, 2028. It may offer short-term relief, but transitioning in and out may not be worth the hassle. - Refinance privately
IDR plans aren’t the right fit for everyone. Many borrowers have returned to full-time income and may benefit from refinancing, which can significantly reduce interest costs and simplify repayment. Just remember: refinancing eliminates federal protections. If PSLF is on the table, do not refinance.
How should you think about this decision?
- Pursuing PSLF? Any IDR plan is generally better than standard repayment. RAP’s interest subsidy will not matter much here, but IBR’s payment cap could increase your forgiveness benefit.
- Need lower payments right now? Stay in SAVE forbearance as long as possible, then transition to an IDR plan when required.
- Concerned about interest growth? RAP’s interest subsidy is a major advantage, especially for high debt-to-income borrowers. If you plan to pay your loans off eventually, this could be a strong option.
What’s your next move?
Choosing the right repayment plan—and the right income documentation—can have a significant impact on how much you repay over time.
Our team specializes in this. We’ll walk you through your options, model your payments and long-term savings using our proprietary tools, and help you complete your application step-by-step.
Click here to learn more and get started.
Brandon Barfield is the President and Co-Founder of Student Loan Professor, and is nationally known as student loan expert for graduate health professions. Since 2011, Brandon has given hundreds of loan repayment presentations for schools, hospitals, and medical conferences across the country. With his diverse background in financial aid, financial planning and student loan advisory, Brandon has a broad understanding of the intricacies surrounding student loans, loan repayment strategies, and how they should be considered when graduates make other financial decisions.
