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If you’re one of the 7 million borrowers on the Saving on a Valuable Education (SAVE) plan, you’ll need to switch to a new plan soon. In March of 2026, a ruling from the Eighth Circuit Court of Appeals permanently eliminated the SAVE plan, bringing years of legal challenges to an end. SAVE borrowers are still in forbearance (and accruing interest since August 2025), but they’ll need to resume payments on an alternative repayment plan later this year.
Here’s what you need to know about SAVE plan updates, including your timeline for switching plans.
Key Points
• The SAVE plan was permanently eliminated in March 2026 following a court ruling that deemed it illegal, ending years of ongoing legal challenges.
• Approximately 7 million borrowers currently in forbearance on the SAVE plan will need to switch to an alternative repayment plan and resume payments in 2026.
• Loan servicers will begin sending notices about changing repayment plans starting July 1, 2026, giving borrowers 90 days to make the switch before potential autoenrollment.
• A new Repayment Assistance Plan (RAP), created under the One Big Beautiful Bill Act, launches July 1, 2026 as the only income-driven option available for newly borrowed loans.
• Parent PLUS loan holders who have not yet consolidated must do so by July 1, 2026, or risk losing access to all income-driven repayment options entirely.
What Was the SAVE Student Loan Plan?
The SAVE student loan plan was an income-driven repayment plan introduced by the Biden administration in 2023. It offered lower payments and a faster timeline to student loan forgiveness for many borrowers.
Specifically, it reduced payments on undergraduate loans to 5% of your discretionary income and offered loan forgiveness in as few as 10 years. The other income-driven plans set payments at 10% to 20% of discretionary income and offer forgiveness after 20 or 25 years.
It had other benefits too, including a higher income exemption (which further reduced monthly payments) and no accrual of unpaid interest as long as you paid on time. Thanks to these benefits and revised payment calculations, many borrowers had more affordable monthly payments on SAVE than any other income-driven repayment option.
SAVE Plan Updates: A Timeline of Key Changes
The SAVE plan was quickly met with legal challenges from Republican-led states. Here’s a timeline of what happened.
Legal Challenges and Court Rulings
Shortly after SAVE rolled out, 11 states sued the Education Department (ED) and the Biden Administration to block the plan. According to the states, the SAVE plan exceeded executive authority and would cause a decrease in state tax revenue.
Early court rulings imposed temporary injunctions on the plan, which blocked implementation of features like interest subsidies and accelerated loan forgiveness. During this time, borrowers on SAVE had their student loans placed into interest-free forbearance as they waited on SAVE plan updates. Interest began accruing again on August 1, 2025.
December 2025 Settlement Agreement
On December 9, 2025, the ED announced a proposed settlement with the state of Missouri that would end the SAVE plan. This agreement prevented any new enrollments and denied pending applications. It effectively ended the SAVE plan, but it still needed final court approval.
One Big Beautiful Bill Act (OBBBA) and SAVE’s Termination
In early 2026, Congress approved the Trump administration’s One Big Beautiful Bill Act (OBBBA), which included major changes to the federal student loan system. Along with terminating SAVE, the OBBBA phases out the PAYE and Income-Contingent Repayment plans by 2028. It also introduces two new plans that will be the only repayment plan options for new borrowers as of July 1, 2026.
It’s important to understand these changes, along with Trump’s PSLF changes, if you have federal student loans.
March 2026: The Eighth Circuit Court Ruling
In March 2026, the Eighth Circuit Court of Appeals officially stopped the SAVE plan by ordering a final settlement that deemed the SAVE plan illegal. This ruling also fast-tracked the close of the SAVE plan for current enrollees. Previously, the plan may have been in place through 2028. Now, borrowers will need to switch repayment plans and resume payments in 2026.
This latest SAVE plan update may push more federal borrowers toward student loan refinancing in an effort to save money.
What the End of the SAVE Plan Means for Borrowers
With the SAVE plan gone, borrowers will need to seek an alternative repayment arrangement.
Who Is Affected?
You’re affected by the elimination of SAVE if you’re one of the more than 7 million federal student loan borrowers on the SAVE plan. This includes anyone who was previously on the REPAYE plan and automatically transitioned into SAVE in 2023.
What Happens to Borrowers Currently Enrolled in SAVE?
If you’re currently enrolled in SAVE, you’ll need to switch to a different plan soon. According to the ED, loan servicers will start sending notices about changing plans on July 1, 2026. You’ll then have 90 days to switch.
Interest Accrual and Forbearance Status
When the SAVE plan was first blocked, borrowers had their loans placed in an interest-free forbearance. Due to court injunctions, interest started accruing again on August 1, 2025. If you haven’t been making payments while in forbearance, your loan balance has been increasing due to interest accrual.
Recommended: Student Loan Consolidation vs. Refinancing
Repayment Plan Alternatives to the SAVE Student Loan Plan
You have a few alternative options for income-driven repayment plans.
Income-Based Repayment (IBR)
The Income-Based Repayment plan sets your monthly payments at 10% to 15% of your discretionary income, depending on when you borrowed. It can end in loan forgiveness after 20 or 25 years.
Borrowers who are pursuing the Public Service Loan Forgiveness program may want to choose this plan, since income-based repayment is required to qualify and the two options below are being phased out.
Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR)
PAYE and ICR are two other income-driven options, but they’re slated for elimination by 2028. While you can still apply, you’ll have to change to a different plan in the next few years.
PAYE sets your payments at 10% of your discretionary income and has a term of 20 years, after which you can get your remaining balance forgiven. ICR has higher monthly payments (20% of discretionary income) and a longer timeline (25 years), but it’s the only income-driven plan available to Parent PLUS loan borrowers.
If you have Parent PLUS loans and haven’t consolidated yet, you’ll need to consolidate by July 1, 2026 due to OBBBA changes. Otherwise, you’ll be locked out of any income-driven repayment option. (Just keep in mind that, unlike Parent PLUS refinancing, federal consolidation does not result in a lower interest rate, but rather offers the weighted average of the rates on all your current federal loans.)
Recommended: Current Interest Rates for Student Loan Refinancing
New Repayment Assistance Plan (RAP)
Created by the OBBBA, the new Repayment Assistance Plan (RAP) will be introduced on July 1, 2026. It will be the only income-driven plan for loans borrowed on or after that date.
SAVE borrowers can choose this plan after that date, as well. RAP uses a different calculation than the current plans that’s based on your adjusted gross income (AGI), rather than your discretionary income.
It sets your payments at 1% to 10% of your AGI, depending on your income, and has a repayment term of 30 years.
How to Choose a New Repayment Plan
With several repayment plans to choose from, it can be tough to pick the best one. The Federal Loan Simulator tool can help.
Using the Federal Loan Simulator Tool
The federal Loan Simulator tool helps you compare your payments on various repayment plans. After entering your information, such as your income and loan balance, it will show you how your payments would look after changing your student loan repayment plan.
You can estimate your monthly payments, compare total interest costs, and understand your eligibility for loan forgiveness. Note that as of May 2026, the Loan Simulator doesn’t include the new RAP plan.
There are alternative tools you can use to estimate your payments on RAP, such as this calculator from EDCAP.
What to Expect Next
Keep an eye out for a notification from your loan servicer starting on July 1. You’ll have 90 days to switch to another plan. If you don’t actively switch, your loan servicer will auto-enroll you in a plan, which may not be the best option for your circumstances.
You can also choose to switch sooner if you’d like to resume making payments.
The Takeaway
The past few years of student loan policy have been a rollercoaster, especially if you enrolled in the SAVE plan. Now that SAVE is over, you’ll need to switch to an alternative repayment plan soon. Compare your options so you can proactively pick a plan that best fits your circumstances, rather than having your loan servicer choose one for you.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
What is the SAVE student loan plan?
The SAVE student loan plan was an income-driven repayment plan introduced by the Biden Administration in 2023 that offered lower monthly payments and a faster path to loan forgiveness. It was swiftly met with legal challenges and was permanently eliminated in early 2026.
Is the SAVE plan officially over?
Yes, the SAVE plan is officially over. If your loans were on the SAVE plan, you’ll need to switch to an alternative repayment plan in 2026.
What repayment plan should I switch to after SAVE?
The best repayment plan depends on your financial situation and repayment goals. Other income-driven options are IBR, PAYE, and ICR, as well as the new RAP after July 1, 2026. Note that PAYE and ICR will be phased out by 2028.
Will I lose my progress toward student loan forgiveness?
You likely won’t lose progress toward student loan forgiveness. However, while your time in forbearance probably won’t count, those pursuing PSLF may get to “buy back” that time upon completion of 10 years of public service.
When will SAVE borrowers be required to make payments again?
SAVE borrowers will have to make payments again after changing to an alternative repayment plan. You’ll need to enroll in a different plan within 90 days of receiving notification from your loan servicer, which may arrive starting on July 1, 2026.
Photo credit: iStock/BlackSalmon
SoFi Student Loan Refinance
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