Major Changes in Student Loan Repayment Plans Starting July 1

Starting July 1, millions of student loan borrowers will face new repayment options due to major changes in the federal loan system. The Trump administration is enacting these changes following legislative updates last summer.

The Biden-era repayment plan, known as SAVE, will be dismantled. This plan is the most affordable income-driven repayment option available to borrowers. Around seven million individuals currently enrolled in SAVE will need to select a new repayment option. This comes as their monthly payments, halted for nearly two years due to legal challenges, are set to resume.

Federal loan servicers will soon notify SAVE enrollees of the deadlines for choosing new repayment plans. Borrowers must act to avoid the government automatically assigning them a plan. Notices are set to roll out starting July 1, reflecting sweeping changes stemming from a tax and policy bill.

“There’s a lot of anxiety out there,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, which provides advice to borrowers. “It’s not just about the student loan payments going up. It’s everything hitting at once.”

The transition is timely, as many families face financial strains. Inflation is on the rise, utility bills and gas prices are surging, and health care costs are increasing for some.

While SAVE borrowers need to act quickly, other borrowers will also be impacted by these changes. Two new repayment programs will be introduced, while several existing ones will be phased out. Understanding these options is crucial for borrowers to manage their financial obligations effectively.

**Monthly Payments Under Each Repayment Plan**

• Income: $30,001
• Standard 10-year: $690
• RAP (15%): $25
• IBR (15%): $0
• IBR (10%): $0
• PAYE: $0
• ICR: $148

• Income: $50,001
• Standard 10-year: $690
• RAP (15%): $158
• IBR (15%): $228
• IBR (10%): $152
• PAYE: $152
• ICR: $481

• Income: $70,001
• Standard 10-year: $690
• RAP (15%): $358
• IBR (15%): $478
• IBR (10%): $319
• PAYE: $319
• ICR: $611

• Income: $90,001
• Standard 10-year: $690
• RAP (15%): $625
• IBR (15%): $690
• IBR (10%): $486
• PAYE: $486
• ICR: $611

• Income: $110,001
• Standard 10-year: $690
• RAP (15%): $867
• IBR (15%): $690
• IBR (10%): $652
• PAYE: $652
• ICR: $611

The noted incomes end with $1 due to precise income cutoffs in the new RAP plan. Plans such as Pay as You Earn (PAYE) and Income-Contingent Repayment (ICR) will be unavailable after July 2028.