The SAVE Plan forbearance has provided relief for millions of federal student loan borrowers, but significant changes are on the horizon. Starting July 1, 2026borrowers will receive 90-day notices from federal loan servicers, urging them to select a new repayment plan or face automatic enrollment in the Standard or Tiered Standard Plan.
This shift follows a settlement that concluded 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, signaling the end of the multi-year payment pause. For families who haven’t made a federal student loan payment since 2026the next four months are pivotal.
The critical timeline for borrowers
Borrowers must adhere to a strict timeline to avoid automatic enrollment in potentially costly repayment plans. Loan servicers will begin issuing notices on July 1, 2026giving borrowers 90 days from the date of their personal notice to switch plans. Most borrowers will need to exit forbearance by September or October 2026.
It’s crucial to note that the act of sending a notice does not guarantee receipt. Borrowers must ensure their contact information is up-to-date and regularly check their loan servicer portal to avoid missing critical deadlines. Failure to transition in time will result in automatic enrollment in the Standard Repayment Plan or the new Tiered Standard Plandepending on the loan type.
Missing payments after auto-enrollment can lead to delinquency, default, and the resumption of wage garnishment and other collection activities this fall.
Exploring repayment plan options
Borrowers exiting the SAVE Plan will find a restructured lineup of repayment plans. Here’s a closer look at the available options:
Repayment Assistance Plan (RAP)
The newest income-driven plan, launching July 1, 2026bases monthly payments on a borrower’s income and number of dependents. RAP includes a subsidy that prevents unpaid interest from growing the principal balance, provided the borrower makes full, on-time payments. Forgiveness occurs after 30 years of qualifying payments, and RAP qualifies for Public Service Loan Forgiveness (PSLF).
Income-Based Repayment (IBR)
IBR remains open for existing borrowers and may offer lower payments than RAP, especially for those earning over $100,000 annually. 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. Those who borrowed on or after that date are in “new IBR” with payments at 10% of discretionary income and a 20-year forgiveness window.
PAYE and ICR
Both plans will close for enrollment on July 1, 2027although there are some potential issues with this deadline. Borrowers already enrolled in PAYE can stay until the plan sunsets in 2028. PAYE can serve as a useful “parking spot” for those planning to switch to RAP later, as it can help avoid interest capitalization.
Tiered Standard Plan
This new plan, also launching July 1, 2026assigns 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 or forgiveness.
Standard Repayment Plan
The pre-existing 10-year fixed plan remains available and is PSLF-eligible.
Impact on household budgets
For most SAVE borrowers, the transition from forbearance to a repayment plan will present financial challenges. A family of four with $60,000 in household income and $45,000 in federal loans could see monthly payments range from $110 to $400, depending on the chosen plan. Borrowers with graduate debt over $100,000 could face payments exceeding $750 a month under the Tiered Standard Plan.
Two hidden costs to watch for are capitalization and PSLF credit. Switching from SAVE does not cause interest capitalization, but moving from IBR does. PAYE remains a clean stopover for borrowers planning to enroll in RAP. Additionally, SAVE forbearance months do not automatically count toward the 120 payments needed for PSLF. Borrowers can recover those months through the PSLF Buyback program, although as of April 30, 202688,000 applications were still pending, leading to multi-year wait times.
Action steps for borrowers
To prepare for the end of the SAVE forbearance, borrowers should take the following steps:
1. Log in to StudentAid.gov and your loan servicer’s portal this week to update your contact information.
2. Run a student loan calculator using your latest tax return to compare projected monthly payments under each plan.
3. Understand your PSLF status before choosing a plan. Public service borrowers should stay on an IDR plan that qualifies, such as IBR, PAYE, ICR, or RAP.
4. Consider PAYE as a bridge if you plan to enroll in RAP later to avoid interest capitalization.
The 90-day clock is short, but borrowers who plan ahead can set themselves up for success, while those who let the default kick in will pay more than necessary for the next decade or longer.
