WASHINGTON, June 26, 2026, 17:06 EDT
- SAVE borrowers won’t face forced exits until at least Sept. 29, but the July 1 caps for new borrowers stay in place.
- SLM Corp NASDAQ:SLM, the parent of Sallie Mae, said federal changes could bring $4.5 billion to $5 billion more in yearly originations—roughly a third of the current private-education-loan market.
- Inside Higher Ed points to independent research suggesting at least 10% of postbaccalaureate students could have a funding gap and little or no credit.
- SoFi Technologies NASDAQ:SOFI, SLM, Nelnet NYSE:NNI, and Navient NASDAQ:NAVI all traded higher as of the dateline.
Private student-loan lenders face a credit test going into July 1. Federal borrowing caps may steer more grad and parent loans their way, but another delay in mandatory SAVE plan exits and borrower credit data show the shift isn’t just about getting more volume. Instead, lenders look set to sift borrowers by credit.
After the U.S. regular session ended, SoFi Technologies NASDAQ:SOFI was last up 3.4%. SLM Corp NASDAQ:SLM, which owns Sallie Mae, added 3.6%. Nelnet NYSE:NNI edged up 0.6%. Navient NASDAQ:NAVI rose 2.8%. Combined, the four were valued at about $35 billion.
SAVE plan borrowers are getting a break until at least Sept. 29 before they have to switch repayment plans, the Education Department told a federal court this week, according to Business Insider. According to the report, most won’t have to move right away, with transfers set to happen in waves.
Servicers and consumer lenders had been watching for the July 1 notices and 90-day timelines flagged in the March guidance. Borrowers not responding will move to the Standard or Tiered Standard plan, according to the department. “If you take out a loan, you must pay it back,” Education Undersecretary Nicholas Kent said in March. U.S. Department of Education
The borrowers are challenging that process. In a new court filing seeking a preliminary injunction, their lawyers at Public Goods Practice claimed REPAYE is still “law on the books.” They told the court the agency shouldn’t end benefits already earned, and SAVE borrowers need to remain in REPAYE while the case moves forward. “Injuries could ‘start to happen right away,’” attorney Austin Hinkle told Business Insider.
Private lending looks big in SLM’s books. In a May investor deck, SLM listed $14 billion in private education loans. The deck put estimated 2024-25 higher-education spend from federal and state loans at $89 billion. SLM also said in the deck that federal reforms could lift its annual originations by $4.5 billion to $5 billion after the transition, a boost equal to roughly 32% to 36% of the private-loan market the slide showed.
Sallie Mae made product changes earlier. In May, it said it was expanding its graduate and law lending. Patrick Freeman, who runs consumer lending, said advanced degree students need support “as they navigate changes to federal student loan programs.” Sallie Mae Newsroom
SLM’s numbers lay out the filter. The Smart Option portfolio had a 746 weighted average FICO score at the start. Only 23% of its borrowers came in under 700. A new crop of private loan borrowers could look riskier. The Postsecondary Education and Economics Research Center at American University said at least a quarter of postbaccalaureate students would have to turn to private loans or other money at today’s tuition, and almost 40% of them had subprime or no credit.
At least one in 10 postbaccalaureate students faces both a funding gap and weak or no credit, the numbers show. That split can decide whether investors see loan applications rise or actual loans booked. Private lenders can turn down these borrowers or ask for cosigners, while federal loan caps leave credit risk with the government, not the banks.
Private lenders can’t make up all of the lost loan volume, Beth Akers, senior fellow at the American Enterprise Institute, told Inside Higher Ed. Bonnie Latreille at the Student Borrower Protection Center said some students could see “way more expensive loans” or even lose access entirely. Scott Buchanan of the Student Loan Servicing Alliance warned that schools and lenders need to “walk before we run” while waiting for regulators. Inside Higher Ed
Judge Beryl Howell of the U.S. District Court this week stopped an Education Department rule that limited which programs qualify as professional degrees. The rule would have put students in nursing and some health fields under lower loan caps. The judge left the loan caps in place.
Federal student loans remain the top risk indicator. Federal Student Aid data out June 23 showed 42.6 million people still owe $1.7 trillion. Of that, 9 million borrowers are in default on $220 billion, and 8.4 million have $485 billion in forbearance. Income-driven repayment accounts for $784 billion among 13 million borrowers.
July 1 is the next major deadline as new federal caps and the new repayment structure kick in for new borrowers. Sept. 29 is now the first date the department says SAVE borrowers could be moved to a different plan.
