Key Points
- Roughly 7 million SAVE Plan borrowers will start receiving 90-day notices from their loan servicers starting July 1, 2026, forcing them to choose a new repayment plan within 90 days.
- Borrowers who fail to select a new repayment plan will be auto-enrolled into either the Standard or Tiered Standard Plan.
- The Repayment Assistance Plan (RAP) and a new Tiered Standard Plan launch July 1, 2026, alongside existing plans such as IBR, PAYE, and ICR.
The 7 million Americans still waiting in the SAVE Plan forbearance are about to have to make a choice. Starting July 1, 2026, federal loan servicers will mail 90-day notices ordering borrowers to either pick a new repayment plan or be moved by default into a Standard or Tiered Standard Plan (which may be the most expensive option available).
The deadline follows a settlement that ended the Saving on a Valuable Education program, after the Eighth Circuit ruled the Biden-era plan unlawful. The U.S. Department of Education has been sending “courtesy notices” to borrowers encouraging them to change plans, another signal that the multi-year payment pause is over.
For families who potentially haven’t made a federal student loan payment since 2020, the next four months are critical. Here’s what borrowers should be doing right now.
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The Timeline That Borrowers Cannot Miss
It is essential that borrowers don’t miss this timeline – even if they miss communication from the Department of Education. Borrowers need to realize that the act of sending a notice does not mean that they will receive the notice. If the borrower doesn’t have updated contact information or isn’t checking their loan servicer portal, they could miss a critical timeline deadline.
Sending A Notice ≠ Receiving A Notice
Loan servicers will begin issuing notices on July 1, 2026, and each borrower has 90 days from the date of their personal notice to switch. Most borrowers will likely have to exit forbearance no later than September or October 2026. Anyone who doesn’t transition in time will be moved automatically into either the Standard Repayment Plan or the new Tiered Standard Plan, depending on their loans.
If borrowers miss payments after being auto-enrolled in Standard, they will begin the path to delinquency and default. Wage garnishment and other collection activity is also set to resume this fall.
How The Next Repayment Plan options Compare
Borrowers exiting SAVE will choose from a smaller, restructured lineup of repayment plans compared to years ago.
Repayment Assistance Plan (RAP). The newest income-driven plan launches July 1, 2026. RAP bases monthly payments on a borrower’s income and number of dependents claimed on their tax return, with a subsidy that prevents unpaid interest from growing the principal balance — as long as the borrower makes the full scheduled payment on time each month. Forgiveness happens after 30 years of qualifying payments. RAP qualifies for Public Service Loan Forgiveness (PSLF).
Income-Based Repayment (IBR). IBR remains open for existing borrowers and may still offer lower payments than RAP, especially for borrowers who earn over $100,000 per year. Borrowers who first took out loans before July 1, 2014, are in “old IBR” with payments at 15% of discretionary income and a 25-year forgiveness window. Anyone who borrowed on or after that date is in “new IBR” with payments at 10% of discretionary income and a 20-year forgiveness window.
PAYE and ICR. Both plans will allegedly close for enrollment on July 1, 2027 (however, there are some potential issues here). Borrowers already enrolled in PAYE can stay until the plan sunsets in 2028. PAYE can be a useful “parking spot” as switching from SAVE to PAYE rather than directly to IBR can avoid interest capitalization if a later move to RAP is planned.
Tiered Standard Plan. Also new on July 1, 2026, this plan assigns fixed repayment terms based on balance: 10 years for balances under $25,000, 15 years for $25,000 to $49,999, 20 years for $50,000 to $99,999, and 25 years for balances of $100,000 or more. There is no income component and no forgiveness.
Standard Repayment Plan. The pre-existing 10-year fixed plan remains available and remains PSLF-eligible.
Here’s a chart to help borrowers decide which plan is best:
What This Means For Household Budgets
For most SAVE borrowers, the move from forbearance to an income-driven repayment plan or standard payment is going to land hard.
A family of four with $60,000 in household income and $45,000 in federal loans could see monthly payments climb from $0 to roughly $110 to $400 depending on plan choice. Borrowers with graduate debt over $100,000 could see payments under the Tiered Standard Plan exceed $750 a month.
Run The College Investor’s Student Loan Calculator to see the impact.
There are also two hidden costs to watch.
The first is capitalization. Switching from SAVE does NOT cause interest capitalization. However, later moving from IBR does cause interest capitalization (the other main capitalization events are leaving in-school deferment and consolidation). PAYE remains the cleanest stopover for borrowers who eventually plan to enroll in RAP.
The second is PSLF credit. SAVE forbearance months do not automatically count toward the 120 payments needed for Public Service Loan Forgiveness. Borrowers can recover those months only through the PSLF Buyback program — and as of April 30, 2026, 88,000 applications were still pending (leading to a multi-year wait time). Borrowers pursuing buyback may also not even realize savings by waiting, due to how PSLF buyback is calculated.
Action Steps For Borrowers
- Log in to StudentAid.gov and your loan servicer’s portal this week. Update your address, email, and phone number so the July notice actually reaches you. Borrowers who haven’t logged in within the last six months may have their notifications sent to outdated contact information.
- Run a Student Loan Calculator with your latest tax return. The Federal Student Aid Loan Simulator at StudentAid.gov or The College Investor’s Student Loan Calculator compares projected monthly payments under each plan using your real income. Bring that number into your household budget conversation now, not in October.
- Understand your PSLF status before you choose a plan. Public service borrowers should stay on an IDR plan that qualifies — IBR, PAYE (until 2028), ICR (until 2028), or RAP.
- Consider PAYE as a bridge if you plan to enroll in RAP later. Borrowers worried about interest capitalization can use PAYE as a temporary stop to keep unpaid interest off the principal until RAP becomes available.
The 90-day clock is short, but borrowers have had warnings of this change for month. Borrowers who plan could set themselves up for success, while borrowers who let the default kick in will pay more than they need to for the next decade or longer.
Don’t Miss These Other Stories:
How The Repayment Assistance Plan (RAP) Works: Payments, Eligibility, And Forgiveness
Can You Settle Student Loan Debt For Less Than You Owe?
What Is Considered High Student Loan Debt?
Editor: Colin Graves
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