Millions of federal student loan borrowers remain enrolled in the discontinued Saving on a Valuable Education plan even after missing deadlines to select a replacement. The Education Department has sent notices directing borrowers to choose another repayment option, but many accounts still show SAVE-related forbearance.
The transition affects about 6.5 million people who were still in SAVE when the Education Department began sending notices in batches in July. Borrowers generally received a notice describing a 90-day period to choose a new plan, followed in some cases by a final 30-day period. The notices used those general timelines rather than a specific calendar date.
What happens after the deadline
Borrowers who do not voluntarily select another repayment plan are scheduled to be placed into the standard repayment plan. The standard option generally uses a fixed payment schedule, while SAVE had provided terms based on a borrower's income and family circumstances before the plan was halted.
The notices have produced different experiences among borrowers. Some accounts continued to display SAVE and a related forbearance after the stated transition period ended. Other borrowers received follow-up messages reminding them to select a new plan, without receiving a new specific deadline.
Abby Shafroth, director of the National Consumer Law Center's student loan assistance division, described the notices as “frustratingly confusing and inconsistent” and said borrowers should not disregard them. The National Consumer Law Center is a nonprofit legal advocacy organization that assists student loan borrowers.
- About 6.5 million borrowers were still in SAVE when the transition notices began.
- The notices generally gave borrowers a 90-day period followed by a 30-day period to choose another plan.
- Borrowers who do not choose a plan are slated for the standard repayment plan.
Why SAVE is being replaced
SAVE was an income-driven repayment plan created during the Biden administration. The plan faced legal challenges over whether the executive branch had authority to establish it. Borrowers were placed in forbearance while the litigation continued, and the plan was ultimately dismantled.
For some borrowers, the SAVE forbearance overlapped with pandemic-era protections. As a result, some people have gone as long as six years without being required to make a student loan payment, according to Money.
The transition is taking place while the federal government continues to reorganize repayment options. The Education Department has urged borrowers to choose a different plan rather than wait for an automatic transfer. A borrower’s eventual payment under standard repayment may differ substantially from the amount that would have been required under SAVE because the plans use different rules.
Federal student loan borrowers affected by the transition can review the repayment choices identified in their notices and use the Education Department’s application process to select a plan. The notices also identify standard repayment as the default destination for borrowers who do not make a selection.
