A Highly Popular College Loan is in the Crosshairs

It’s a dizzying time for millions of students and parents who borrowed for college through the federal college loan system.

In 2024 and then in 2025, litigation against a highly popular federal student loan option got swept up into a court battle and “The One Big Beautiful Bill Act” that President Donald Trump signed in the summer brought more federal loan changes and uncertainty. Today I’m sharing what people need to know now about the changes to the most popular income-driven repayment plan.

SAVE (Saving on a Valuable Education)

One of the most valuable aspects of the federal college loan program is that borrowers overwhelmed with their debt can enroll in an income-driven plan. IDR plans allow borrowers to repay their debt based on their income and household size rather than what they would otherwise owe monthly.

Over the years, the government has continued to add IDR options to the mix, which has been confusing for consumers and professionals who advise them. In 2023, the Biden administration rolled out yet another option, SAVE (Saving on a Valuable Education), which quickly became the favorite IDR plan because of its generous terms.

Ultimately, however, litigation and the passage of “The One Big Beautiful Bill Act” will force the eight million or so SAVE borrowers to choose another repayment method.

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A court injunction spurred by litigation launched by GOP state attorneys general ultimately resulted in SAVE borrowers being placed in involuntary forbearance since July 2024. The monthly repayments were paused along with the interest. Plenty of borrowers didn’t mind the pause.

However, the interest on the SAVE loans restarted in August 2025, so it’s incumbent on borrowers to find a different plan to repay their debt. SAVE borrowers can remain in their plan until July 1, 2028, but it doesn’t make sense since the interest will be accruing on otherwise frozen loans.

Another reason some SAVE borrowers will want to bail on SAVE now is that as long as they remain in their paused plan, individuals enrolled in the Public Service Loan Forgiveness program can’t get monthly credit for their non-existent payments.

The PSLF allows people in government jobs and some nonprofits to have their loan amount forgiven after 10 years of serving in qualified employment.  Can you imagine how valuable this 10-year forgiveness plan is, for example, for a physician who works at a nonprofit hospital and took on lots of debt in medical school? Individuals will restart their monthly credit toward forgiveness through the PSLF by switching to another IDR plan.

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Repayment Options

SAVE borrowers have a few options.

Borrowers can choose to move to a time-driven repayment plan. The most popular is the standard 10-year repayment plan. In this plan, people pay the same fixed amount each month regardless of their financial circumstances and will be debt-free in a decade.

Another option is to pick another income-based repayment plan simply. This won’t be easy, in part, because most of the other IDR options for current individuals in repayment will expire by July 1, 2028. The options that will disappear are the following:

With the elimination of these three plans only one that currently exists, IBR (Income-Based Repayment), will remain. IBR will not expire in the summer of 2028 for people who are in the plan at that time.

All these IDR options will eventually be replaced with a new income-driven plan called RAP (Repayment Assistant Plan). Starting July 1, 2026, RAP will be the only IDR open for new enrollment.

RAP will determine the payments based on an individual’s adjusted gross income, and the percentage owed will be higher for individuals earning more. For instance, for someone making between $50,001 and $60,000, the monthly payment would be 5% of income, and it would be 6% for those making between $60,001 and $70,000. The ceiling would be 10% for those making $100,001 or higher.

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Parent PLUS Loans

Another important development to consider is how the legislation impacts Parent PLUS loans. Historically, the only way for parents to access an income-driven plan was to consolidate their PLUS Loans into a federal Consolidation Loan. The recent legislation will end the ability for parents to consolidate their PLUS loans on June 30, 2026.

Parents must consolidate before that time to preserve their access to an IDR plan. The only IDR plan available to parents is the ICR plan, but that one, as mentioned earlier, will disappear in 2028 for those in the plan. Nonetheless, being in the ICR plan will get them grandfathered into qualifying for an IDR plan.

What SAVE Borrowers Can Do

For SAVE  individuals who want to switch to a different plan, it’s smart to act now. The U.S. Department of Education has a massive backlog of applications wishing to change plans. In July, the Department of Education said roughly 1.5 million applications were waiting to be processed.

SAVE borrowers can use the federal Loan Simulator to estimate monthly payments under the current repayment plans, determine repayment eligibility and learn which option best meets their repayment goals.

It makes sense to use the Loan Simulator again when the RAP option comes online next summer to see if switching plans is worthwhile.