Millions of SAVE borrowers face choices
More than 7 million borrowers on the SAVE plan must choose a new repayment option or be automatically enrolled in a different plan starting in July. (wlwt.com) Meanwhile, over 643,000 borrowers are waiting for processing and collection efforts are expected to target about 500,000 people this summer. (newsweek.com) (politico.com)
Millions of federal student loan borrowers on the SAVE plan now have to pick a different repayment option before July 1 or be moved into another plan by the government. (ed.gov) The U.S. Department of Education said it began sending guidance in late March to 7.5 million borrowers enrolled in SAVE after a March 10 court order ended the Biden-era program. Loan servicers including MOHELA and Edfinancial now tell borrowers that SAVE has ended and that affected accounts will be contacted about other plans. (ed.gov) (mohela.studentaid.gov) SAVE was an income-driven repayment plan, which means monthly bills were tied to a borrower’s earnings instead of a fixed schedule. The department says borrowers leaving SAVE must enter a “legal federal student loan repayment plan,” with Income-Based Repayment still available and a new Repayment Assistance Plan scheduled to launch for new borrowing rules on July 1, 2026. (ed.gov 1) (ed.gov 2) The scramble is colliding with a processing backlog. A court filing reported this week says more than 643,000 borrowers are still waiting for applications tied to repayment plans or loan forgiveness to be processed. (cnbc.com) (forbes.com) At the same time, the administration is moving ahead with collections on defaulted loans. The Education Department said collections resumed on May 5, 2025 through the Treasury Offset Program, and Administrative Wage Garnishment was slated to follow later. (ed.gov) (fsapartners.ed.gov) In January, the department said it was delaying involuntary collections, including wage garnishment and Treasury offsets, while it implemented repayment changes under the Working Families Tax Cuts Act. But reporting this week says officials are preparing a summer push that could move roughly 500,000 defaulted borrowers into a Treasury-run collections program. (ed.gov) (universitybusiness.com) The legal fight behind this started in 2024, when a federal appeals court blocked parts of SAVE and forced the department to pause online applications for income-driven repayment before reopening them under tighter rules. Interest for borrowers left in SAVE forbearance started accruing again on August 1, 2025, after the department said a court injunction barred the zero-interest treatment. (ed.gov 1) (ed.gov 2) Borrowers who do nothing are running into a system with fewer options, slower processing and renewed enforcement. The next deadline is July 1, when the post-SAVE transition is set to begin in earnest. (ed.gov) (cnbc.com)
