Deadline Approaches for Federal Student Loan Repayment Plan Changes

Some federal student loan borrowers who participated in the now-defunct Saving on a Valuable Education (SAVE) repayment plan face a pressing deadline to choose a new repayment option. Without action, they risk being automatically transferred to a different plan. Borrowers’ initial deadlines start on September 29, 90 days after federal loan servicers began notifying SAVE borrowers on July 1.

Timeline for Borrower Notifications

September 29 is not a uniform deadline nationwide. Borrowers are contacted in phases and have 90 days from the date of their individual notice to select a new plan. The U.S. Department of Education notes that those who don’t choose will be switched to either the Standard Repayment Plan or the new Tiered Standard Plan. Additional options are available if borrowers decide on them.

Kaydee Ambas, a consumer finance educational instructor, emphasizes the risks of default options. “If you miss the 90-day window in your servicer notice, you can be automatically placed into the Standard or Tiered Standard Repayment Plan, where the payment is based on your loan balance rather than your income,” she said. For borrowers who prefer lower, income-based payments, this change could lead to higher monthly bills.

Applicable Deadlines

The immediate deadline concerns SAVE borrowers who received notices at the start of July. For instance, a July 1 notice has a deadline of September 29. Notices dated later offer more time, with deadlines extending into the coming months. Loan servicers have different schedules for reaching borrowers. MOHELA notifies in waves from July to October, giving 90 days from notice date. Edfinancial sent its notifications between July 1 and August 15.

Ambas advises borrowers to check their servicer account for deadline details and use the federal Loan Simulator to analyze costs of different repayment plans.

Impact of Inaction

Borrowers who miss their deadline will be moved from the SAVE plan to either a Standard Repayment Plan or a Tiered Standard Plan. For loans disbursed before July 1, 2026, the Standard Plan has fixed payments over 10 years. The Tiered Standard Plan, available since July 1, offers 10, 15, 20, or 25-year payment terms based on the owed amount.

Repayment Options

John Wittelsberger, a certified financial planner, notes that the Standard Plan can be suitable for borrowers who can afford larger payments and want an end date. “The standard repayment plan works exactly as it sounds. Payments are fixed, the payoff timeline is clearly defined, and the loan balance steadily declines toward a known endpoint,” he said.

For higher earners, this plan can offer certainty and potentially lower interest costs. The new Repayment Assistance Plan (RAP), available since July 1, adjusts payments based on gross income and dependents. Payments range from $10 monthly to 10% of income, reduced by $50 for each dependent, with periods up to 30 years. RAP provides flexibility for those with variable expenses or income.

Furthermore, some might qualify for Income-Based Repayment (IBR), which usually requires payments of 10% or 15% of discretionary income, capped at the amount owed under a 10-year Standard Plan. Any remaining balance can be forgiven after 20 or 25 years of qualifying payments.

The Federal Student Aid advises checking the StudentAid.gov dashboard to verify loan types and disbursement dates, which affect eligibility for repayment plans.