After more than a year in limbo after the SAVE plan was blocked by the courts, millions of borrowers will now have to select a new repayment plan following an agreement to eliminate it. The Department of Education announced the end of SAVE following an agreement with the State of Missouri—home to servicing giant MOHELA—which would result in the withdrawal of the lawsuit to block the plan. According to the announcement, “If the parties’ joint proposal is approved by the court, borrowers currently enrolled in the illegal SAVE Plan will have a limited time to select a new, legal repayment plan and begin repaying their student loans.”
Borrowers currently enrolled in SAVE will soon have to apply for one of the remaining repayment plans. Although this year’s omnibus spending bill made significant changes to Income-Driven Repayment (IDR) plans, they are still available to borrowers and remain largely unchanged for the moment. The newly created Repayment Assistance Plan (RAP) is not yet available, and likely won’t be before borrowers need to switch to a new plan. Both PAYE and ICR—which will both be eventually phased out—are still available and should remain so until 2028. IBR is also available, and will remain so even after the other IDR plans are eliminated. The partial financial hardship requirement has also been removed from IBR, which makes it more widely available to borrowers with larger incomes.
We don’t yet know exactly when borrowers will be required to change plans, but it will likely be in early 2026. If you are currently enrolled in SAVE, give us a call. We can help you compare payments between available plans—including after PAYE and ICR are sunsetted in 2028—and make sure you have all the figures before you change plans.
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