Student loan servicers start SAVE exit clock for borrowers

Federal student loan servicers have begun sending notices that start a 90-day deadline for borrowers to leave the Saving on a Valuable Education plan, known as SAVE. The shift affects a large borrower base: more than 6.9 million people remained in the plan as of March, carrying average debt of nearly $55,000, according to higher education analyst Mark Kantrowitz.

A federal appeals court earlier this year ordered the end of the Biden-era repayment program. The transition comes as repayment choices have changed under President Donald Trump’s “one big beautiful bill act,” with those changes taking effect July 1.

Deadlines will vary by borrower

The U.S. Department of Education said in a June 25 court filing that the earliest SAVE exit deadline will be Sept. 29, though many borrowers will receive later dates. The department has said servicers will contact borrowers at different times, and each notice will set a borrower-specific deadline.

Nelnet, one of the federal loan servicers, says in an online FAQ that it is contacting nearly three million borrowers in stages and that notices will be sent between July 2026 and March 2027. Nicholas Kent, a senior Education Department official, told CNBC in June that servicer announcements could arrive on different dates through the summer.

Borrowers do not need to wait for a notice to begin the process. Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York, told CNBC that borrowers may switch plans through their Federal Student Aid account at StudentAid.gov.

What happens without a choice

If a borrower does not select a new plan within 90 days of receiving a servicer notice, the borrower will be moved into either the Standard Repayment Plan or the new Tiered Standard Plan, which became available July 1.

Will Sealy, chief executive and founder of Summer, a company that advises loan holders, told CNBC that borrowers should review their options and enroll before their SAVE deadline. He said automatic placement in the Standard Plan can leave borrowers with higher payments than other available choices.

Borrowers placed in a Standard plan may still apply later for an income-driven repayment plan, Nierman said. Income-driven repayment plans set monthly bills as a share of a borrower’s income.

Failure to resume payments after leaving SAVE can have consequences. Loans may become delinquent, and after 270 days of nonpayment borrowers are likely to enter default. After 360 days, the federal government can garnish wages, tax refunds and Social Security payments. The Trump administration delayed the scheduled restart of wage garnishments and collections in January, and officials have not announced when those actions will resume.

New and existing repayment options

The Education Department offers an online loan simulator that estimates monthly bills under different federal repayment plans.

One new income-driven option is the Repayment Assistance Plan, or RAP. Under RAP, monthly payments generally range from 1% to 10% of earnings, with higher earners paying a larger share. The plan has a $10 minimum monthly payment and provides forgiveness after 30 years. It also reduces monthly bills by $50 for each qualifying dependent.

Many borrowers with existing federal loans can still use some current income-driven plans, including Income-Based Repayment, or IBR. Under IBR, borrowers with loans taken out on or after July 1, 2014, pay 10% of discretionary income and may receive forgiveness after 20 years. Borrowers with older loans pay 15% and may receive forgiveness after 25 years.

The Income-Contingent Repayment plan and Pay As You Earn remain available to current borrowers for a limited period, but Carolina Rodriguez, director of EDCAP, told CNBC those programs no longer result in debt forgiveness. Borrowers may remain in ICR or PAYE until July 1, 2028, and if they later move into IBR or RAP, prior payments count toward forgiveness, Rodriguez said.

This story draws on original reporting from CNBC.