More than 7 million federal student loan borrowers face steep payment increases as the SAVE repayment plan officially ends, with 51% of those exiting the program seeing monthly payments rise by $500 or more, according to a July 2026 report from the Student Debt Crisis Center.
Starting July 1, 2026, loan servicers began sending 90-day notices instructing borrowers enrolled in the Saving on a Valuable Education (SAVE) plan to select a new repayment option or face automatic reassignment. The plan’s termination stems from the One Big Beautiful Bill Act, signed into law in late 2025, which ended SAVE after years of legal challenges from Republican attorneys general.
The payment shock is substantial. The Student Debt Crisis Center’s survey of 842 respondents found that borrowers transitioning off SAVE face a median monthly payment of $674 under the Standard repayment plan, compared to just $110 under SAVE. For the 27% of respondents who paid $0 monthly on SAVE, the new median estimated payment jumps to $560 per month.
SAVE was known for its generous income-driven formula, which expanded the income exemption to 225% of the federal poverty level and reduced undergraduate loan payment percentages. According to Kate Wood, a lending expert at NerdWallet quoted in PBS reporting, most borrowers can expect their payments to increase after SAVE’s demise because other income-driven repayment plans use less-generous formulas for calculating income.
The transition creates urgency for borrowers to act within the 90-day window. Those who fail to select a new plan face automatic reassignment, though the specific default plan remains unclear. Borrowers have several options: the Standard repayment plan, Graduated repayment, Extended repayment, Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Income-Based Repayment (IBR). Starting July 2026, a new Repayment Assistance Program (RAP) is replacing ICR and PAYE.
Borrowers pursuing forgiveness programs face additional time pressure. Months spent in SAVE forbearance—during which loans accrued interest but payments were paused—will not count toward income-driven forgiveness deadlines, which typically run 20 to 25 years. Betsy Mayotte, founder of The Institute for Student Loan Advisors, emphasized in PBS reporting that borrowers seeking forgiveness “should switch over ASAP because you’re just losing time.”
The broader impact raises concerns about default rates. The Student Debt Crisis Center’s survey found that 91% of respondents face a payment increase, totaling a projected $7.1 million in additional payments among survey respondents alone. Experts told PBS News that ending SAVE could trigger a default crisis, particularly for borrowers who cannot afford the higher payments. According to federal data, about 3.4 million Americans were more than 270 days late on loan payments as of late 2025, and roughly 6.6 million borrowers owe almost $170 billion in federal student loans.
Borrowers navigating the transition should first update their contact information on both studentaid.gov and their loan servicer’s website, then compare repayment options using the government’s loan simulator. For those facing unaffordable payments, Wood noted that regular forbearance or deferment may offer temporary relief, though neither stops interest from accruing. The Trump administration has signaled it will not garnish wages for borrowers in default for now, but has not committed to a permanent policy.
The related major overhaul of student loans and new repayment rules taking effect alongside SAVE’s end includes changes to income calculations and payment formulas. Some borrowers pursuing Public Service Loan Forgiveness may benefit from the Education Department’s buyback opportunity, which allows a lump-sum payment to count toward qualifying payments made during forbearance periods.
Sources
- Student Debt Crisis Center — July 2026 report on payment increases for borrowers exiting SAVE, survey of 842 respondents showing 51% facing $500+ monthly increases and median payment figures.
- PBS NewsHour — Expert analysis from Kate Wood (NerdWallet) and Betsy Mayotte (Institute for Student Loan Advisors) on SAVE’s end, repayment options, and default risks.
- U.S. Department of Education — March 27, 2026 press release announcing SAVE plan termination and 90-day transition timeline for borrowers.
- TICAS (The Institute for College Access & Success) — December 2025 and June 2026 reporting on SAVE termination via the One Big Beautiful Bill Act and new repayment plan rollout beginning July 1, 2026.
