WASHINGTON, June 16, 2026, 19:04 EDT
- Servicers will start sending out notices on July 1 to borrowers in the SAVE plan, who will have at least 90 days to select a different repayment plan.
- The updated Repayment Assistance Plan, or RAP, links payments to what borrowers earn. There’s also a new standard plan with fixed repayment terms from 10 up to 25 years.
- Borrower advocates say online and servicing bugs are cropping up as the transition approaches, with issues reported in PAYE access, IBR calculations, and loan consolidation guidance.
Student loan borrowers in the U.S. are up against a July 1 overhaul of the federal repayment system. The Biden-era SAVE plan is ending, set to be replaced by new repayment options. Borrowers say they’re struggling to get clear information from loan servicers.
Timing is key now that the shift is real. The Education Department said servicers will have to tell SAVE borrowers to switch plans starting July 1 and give them 90 days. If they don’t act, borrowers will be moved into a standard or tiered standard plan.
The change affects a big and shaky portfolio. Federal Student Aid recorded 42.8 million people holding $1.7 trillion in federal student loans as of December 2025. Over 6.5 million borrowers were in SAVE forbearance and 7.7 million recipients with ED-held loans were in default.
SAVE, which stands for Saving on a Valuable Education, was created under President Joe Biden to reduce payments for many student loan borrowers and give quicker forgiveness to some people with small balances. But a court settlement and student-loan changes made under the Trump administration have put SAVE on track to end.
Education Department officials say the new system is supposed to be simpler and more sustainable. Under-secretary of education Nicholas Kent said borrowers have faced uncertainty. “If you take out a loan, you must pay it back,” Kent said. U.S. Department of Education
RAP is set to base monthly payments on 1% to 10% of a borrower’s income, taking $50 off each month for every dependent. Cancellation only happens after 360 on-time payments. The updated tiered standard plan puts borrowers on fixed payments for either 10, 15, 20 or 25 years, based on how much is owed.
Borrowers with older loans who don’t take out new loans after July 1 can still use some existing income-driven repayment plans for now. Choices include Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment. PAYE and ICR are scheduled to end by July 2028. Anyone who borrows new federal loans after July 1 gets RAP or the tiered standard plan.
Things could get tricky with the rollout. CNBC, citing borrower advocates, said some borrowers are struggling to access PAYE, run into wrong Income-Based Repayment numbers, or get bad advice about consolidating loans—moves that can hit forgiveness timelines. Rich Williams, who used to be a deputy assistant secretary at the Education Department, said the department is working under tough deadlines on complicated changes. Education Department press secretary Ellen Keast said the department aims to launch by July 1.
Execution is the main risk here. The Government Accountability Office in March said Federal Student Aid dropped reviews of loan servicers for accuracy and call quality after it cut staff. The GAO warned that mistakes could leave borrowers in the wrong repayment status or trigger faulty bills.
Policy churn is now a problem on its own, borrower groups say. “Every single student loan borrower” is confused, Natalia Abrams, president of the Student Debt Crisis Center, told the Guardian. “I have never seen it this bad,” she said. The Guardian
Graduate and professional borrowers could see the impact differently. Andrew Paulson, columnist at White Coat Investor, said RAP has features to keep balances from rising, but it might cost more than New IBR and PAYE for some doctors. He also pointed out that new consolidations paid out after July 1 may shut borrowers out from older IDR plans.
RAP offers different trade-offs compared to what’s still available. It waives unpaid interest and promises some principal reduction. But where older income-driven plans shield a base level of earnings and don’t use adjusted gross income, RAP does use AGI, skips that poverty protection, and sets the minimum payment at $10. Forgiveness comes after 30 years.
Choosing a plan is a bigger deal for public-service workers. RAP can help with Public Service Loan Forgiveness, but the standard plans don’t have that forgiveness track. So missing a notice or getting the numbers wrong goes beyond paperwork headaches.
The next hurdle isn’t the law but the systems—notice mailings, calculators, servicer tools, and how applications get handled. Borrowers who decide to wait could get a plan, just not always the cheapest one or the one with the most forgiveness credit.
