The SAVE Plan Is Being Terminated — Here Is What 12 Million Borrowers Must Do Now

The SAVE (Saving on a Valuable Education) plan was the Biden administration's income-driven repayment plan — it capped payments at 5% of discretionary income for undergraduate borrowers and offered forgiveness in as few as 10 years for small balances.

In 2025, federal courts blocked key provisions of the SAVE plan, and in 2026 the Trump administration moved to terminate it entirely.

Key facts:

• SAVE plan enrollment is being wound down — new enrollments are closed in most cases
• Borrowers on SAVE were placed into an interest-free administrative forbearance while courts sorted out the plan's legality
• That forbearance is ending — payments are resuming or have already resumed for many borrowers
• ~12 million borrowers are currently delinquent or in default on student loans nationwide
• Federal wage garnishment restarted in January 2026 for defaulted federal loan borrowers — the first time since the COVID pause began in 2020

Two new repayment structures are being introduced, with full implementation expected July 1, 2026:

RAP (Repayment Assistance Plan):

• Payments based on gross income (not discretionary income), using a sliding scale
• Estimated payments range from $0 (low income) to a percentage cap for higher earners
• Forgiveness after 20–25 years (depending on loan type)
• Interest does not capitalize if you make on-time payments

Tiered Standard Repayment Plan:

• Fixed payments over 10–25 years depending on balance
• Lower balances = shorter terms; higher balances = longer terms
• No forgiveness provision — you pay until the balance is zero

Existing plans that remain available:

• IBR (Income-Based Repayment): 10–15% of discretionary income; still available for existing enrollees
• Standard 10-Year Plan: Always available; minimizes total interest
• PSLF (Public Service Loan Forgiveness): Still active for qualifying government/nonprofit employees

Use our Student Loan Calculator to model your monthly payment under different plans.

How to check your loan status: Log into studentaid.gov with your FSA ID. Your loan servicer and status (current, delinquent, or default) will be shown.

Delinquent vs. default:

• Delinquent: 1–269 days past due. Credit score is damaged but garnishment has not started.
• Default: 270+ days past due. The government can garnish wages (up to 15% of disposable income), intercept tax refunds, and withhold Social Security benefits.

How to get out of default:

Option 1 — Fresh Start Program: The Department of Education's Fresh Start initiative allows defaulted borrowers to return to good standing with a single request. Check studentaid.gov to see if this is still available for your loans.

Option 2 — Loan Rehabilitation: Make 9 agreed-upon monthly payments (often as low as $5) over 10 months. Default is removed from your credit report.

Option 3 — Consolidation: Consolidate defaulted loans into a new Direct Consolidation Loan. Faster than rehabilitation but default notation stays on credit report for 7 years.

Act immediately if you have received a wage garnishment notice — you have rights to a hearing and can temporarily halt garnishment while you explore options.

PSLF is still in effect as of 2026 and remains one of the most valuable loan forgiveness programs available.

Who qualifies:

• Government employees (federal, state, local, tribal)
• 501(c)(3) nonprofit employees
• Public school teachers, public hospital workers, AmeriCorps/Peace Corps

Requirements:

• 120 qualifying monthly payments (10 years) on Direct Loans
• Must be enrolled in an income-driven repayment plan (IBR, RAP, or ICR)
• Must work full-time for a qualifying employer

Critical actions if pursuing PSLF:

1. Submit the PSLF Employment Certification Form annually — do not wait until year 10
2. Make sure your loans are Direct Loans (FFEL loans must be consolidated first)
3. Do NOT refinance into private loans — you permanently lose PSLF eligibility

With the SAVE plan ending, PSLF borrowers should enroll in IBR or RAP to maintain qualifying payment status.

Do these in order:

1. Log into studentaid.gov — confirm your balance, servicer, and current repayment status
2. If in default: Apply for Fresh Start, rehabilitation, or consolidation immediately to stop garnishment
3. If on SAVE: Contact your loan servicer to understand what plan you're being transitioned to and when payments resume
4. Choose a plan: If pursuing PSLF → enroll in IBR or RAP. If paying off aggressively → Standard 10-Year. If income is low → RAP or IBR.
5. Set up autopay: Most servicers offer a 0.25% interest rate reduction for automatic payments
6. Recertify your income annually on IDR plans — missing recertification causes your payment to jump to the standard amount

Use our Debt Payoff Calculator to see how extra payments reduce your total interest and payoff timeline.