More than 7 million borrowers enrolled in the Saving on a Valuable Education (SAVE) plan must switch to a new student loan repayment option by October 1, 2026, after a federal court ended the popular income-driven plan on July 1. The overhaul marks the most significant restructuring of federal student loan rules in decades, narrowing repayment options and imposing strict borrowing limits on new students and graduate borrowers under the One Big Beautiful Bill Act.
Loan servicers began notifying SAVE borrowers on or around July 1 that they have 90 days to select a new repayment plan, according to the U.S. Department of Education. Those who fail to choose a plan will be automatically enrolled in either the Standard Repayment Plan or the new Tiered Standard Plan.
The SAVE plan faced years of legal challenges that created uncertainty for millions of borrowers. A federal appeals court overturned a lower court’s decision on March 9, 2026, ordering an early end to the program. The court’s action accelerated what was originally scheduled to be a July 2028 sunset under the One Big Beautiful Bill Act.
For SAVE borrowers, the transition offers several alternatives. Those who do not take out new loans after July 1 can remain on existing income-driven plans including Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), or Pay As You Earn (PAYE). However, ICR and PAYE are set to be phased out by July 1, 2028, requiring borrowers on those plans to switch again before the deadline.
A new income-driven option, the Repayment Assistance Plan (RAP), is now available to all borrowers. RAP sets monthly payments at 1 to 10 percent of adjusted gross income with a $10 minimum payment, regardless of income, according to the Education Department. The plan requires 30 years of payments before loan forgiveness, compared to 20 years under the previous SAVE plan.
New borrowers taking out loans after July 1, 2026, face the most restricted choices. They can only select between the Tiered Standard Plan and RAP. The Standard Repayment Plan offers fixed payments over 10 to 25 years depending on total loan amount, while RAP provides income-based flexibility.
Borrowing Limits Tighten for Students and Families
The restructuring extends beyond repayment plans to borrowing capacity. Parent PLUS loans, which historically allowed parents to borrow up to the full cost of attendance, are now capped at $20,000 annually and $65,000 total per student. Graduate PLUS loans, which previously allowed unlimited borrowing for graduate students, have been eliminated entirely for new borrowers, though current Grad PLUS borrowers can continue under existing terms.
New graduate students can borrow up to $20,500 per year, with a $100,000 lifetime cap for most graduate programs. Professional degree students in fields such as law, medicine, nursing, and physical therapy are restricted to $50,000 annually and $200,000 total. All borrowers face a lifetime cap of $257,500 across undergraduate and graduate education, excluding Parent PLUS loans.
Sarah Austin, a policy analyst at the National Association of Student Financial Aid Administrators, told CBS News that the overhaul represents “the most changes we have seen at this scale in a very long time.” The Education Department described the restructuring as a way to streamline a system that currently consists of seven repayment plans and to address the $1.9 trillion federal student loan debt.
Borrowers who do not actively choose a new plan face automatic enrollment. SAVE borrowers who take no action within the 90-day window will be placed into a standard repayment option by their servicer. Experts recommend that borrowers update their contact information on studentaid.gov and with their loan servicer to ensure they receive all notifications about the transition.
Winston Berkman-Breen, legal director of the advocacy group Protect Borrowers, emphasized the importance of staying informed. “If you have not been paying attention to your loans for four, five, six years, totally understandable. But now is the time to make sure your contact information is up to date,” he said. The Education Department provides an online Student Loan Simulator to help borrowers compare payments under different repayment plans.
Sources
- NerdWallet — details on SAVE plan ending, new repayment plans (RAP and Tiered Standard), borrowing limits, and transition timeline
- CBS News — reporting on July 1, 2026 changes, borrowing limits for Parent PLUS and graduate students, and expert commentary from Sarah Austin and Winston Berkman-Breen
- U.S. Department of Education — official announcements on SAVE plan end, RAP features, and new borrowing limits
- The Guardian — confirmation of 7 million borrowers affected and 90-day transition deadline
- NPR — reporting on SAVE plan ending and impact on borrowers
