Former SAVE Borrowers Face Steep Payment Jumps as Transition Deadline Nears

Millions of federal student loan borrowers enrolled in the new-defunct Saving on a Valuable Education plan must select a new repayment plan or risk being automatically moved into the standard 10-year repayment plan, which could substantially increase monthly payments for many borrowers. Federal loan servicers began notifying SAVE borrowers in July and are providing 90 days to select another option, but only about 18% of the roughly 7.5 million affected borrowers had switched plans as of early September. Borrowers and advocates have reported challenges during the transition, including conflicting notices, temporary outages of the Department of Education’s repayment calculator, and limited access to payment histories needed to evaluate repayment and forgiveness options; the Department says many of the technical problems have been resolved. Among borrowers who have switched, nearly half selected Income-Based Repayment, while others have moved to the new Repayment Assistance Plan.