Overview
- The Education Department will begin notifying roughly seven million borrowers tied to the canceled SAVE plan on July 1 and give each about 90 days from their servicer notice to choose a new repayment option.
- If borrowers do not act, the department will automatically place many people into a default plan that is likely the Standard Repayment Plan, which can raise fixed monthly payments and stop income-based protections.
- The new Repayment Assistance Plan (RAP) will be available to choose starting July 1 and sets payments at about 1%–10% of adjusted gross income with a $10 monthly minimum for very low earners and forgiveness after 30 years.
- Advocates report serious operational problems that could derail choices: the Federal Student Aid IDR application and plan tools are giving wrong payment estimates, hiding options such as PAYE, showing bogus consolidation prompts, and servicers have a large backlog of pending requests.
- The SAVE rollback stems from a multi-state lawsuit and settlement, and experts warn key deadlines like July 1 for consolidations could permanently forfeit access to older income-driven plans and Public Service Loan Forgiveness for some borrowers.