More than seven million borrowers are currently enrolled in the Saving on a Valuable Education (SAVE) federal student loan repayment plan.
But that program is being phased out and effectively ending, according to the U.S. Department of Education.
In December, the ED reached a settlement with the state of Missouri and other challengers that would terminate the SAVE plan. Under that agreement, which is pending court approval, the department will stop enrolling new borrowers, deny any pending applications, and require current SAVE enrollees to move into other, legally compliant repayment plans over a limited window.
As part of a new settlement, 7 million borrowers will be phased out of the SAVE program.
Photo by MementoJpeg on Getty Images
Current SAVE borrowers are in limbo
At present, however, current borrowers are in a sort of limbo. Borrowers already on SAVE have been placed in an administrative forbearance. And that means they haven’t had to make monthly payments, but interest resumed accruing on those loans starting Aug. 1, 2025.
The ED gave little concrete, actionable information to borrowers about deadlines for switching plans, according to published reports.
“This is one more chaotic move by the administration that is sure to confuse and alarm borrowers,” wrote the Institute for College Access & Success in its blog post. “All ED has said so far regarding timing is that the Department, ‘along with the federal student loan servicers,’ will ‘reach out to SAVE borrowers in the coming months with more information.’ ED also notes that it will ‘begin direct outreach to impacted borrowers to provide guidance about how to repay their student loans in the coming weeks.”
The ED is not well prepared to smoothly transition borrowers into other plans, the Institute for College Access & Success wrote. “While the One Big Beautiful Bill Act (OBBBA) opened Income-Based Repayment (IBR) plans to all borrowers (borrowers previously had to demonstrate a ‘partial financial hardship’ to enroll), ED said that it has not yet updated its systems to enable previously ineligible borrowers to enroll, saying the changes should be complete ‘later in December 2025.’”
The ED has also not completed the process of implementing the new income-based plan created in OBBBA, the Repayment Assistance Plan (RAP), the Institute for College Access & Success wrote.
Given that SAVE borrowers are accruing interest, what might they consider doing now? Stay in forbearance and let interest accrue; stay in forbearance but make payments, if possible toward principal; switch to a fixed payment repayment plan, which include the standard repayment plan, the graduated repayment plan, and the extended repayment plan or switch to an income-driven repayment (IDR) plan, which include the income-based repayment (IBR) plan, the income-contingent repayment (ICR) plan and the pay as you earn (PAYE) repayment plan. IDR plans base your monthly payment amount on how much money you make and your family size.
For its part, the ED noted that borrowers currently enrolled in the “illegal” SAVE Plan will have a limited time to select a new, legal repayment plan and begin repaying their student loans, once the court approves the joint settlement between the ED and the State of Missouri.
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In the meantime, the ED is encouraging borrowers to use the Federal Student Aid’s Loan Simulator tool to estimate monthly payments, determine their repayment eligibility, and select a legal repayment plan that best fits their needs and goals.
On Dec. 22, 2025, the ED updated its systems and tools, including Loan Simulator, to allow borrowers who don’t have partial financial hardship to explore and then enroll in the Income-Based Repayment Plan using the online income-driven repayment (IDR) plan application: StudentAid.gov/idr.
Financial advice for SAVE borrowers
So what advice do financial planners have for the seven-plus million SAVE borrowers?
There is no one right answer to this question, since it will depend upon one’s specific goals and overall financial situation, said Brittany Brinckerhoff, a certified financial planner Hilltop Wealth Advisors.
“But generally speaking, if your goal is to pay off your student loans, then it almost always makes sense to start making monthly payments again since your loans are accruing interest,” she said. “You don’t necessarily need to leave the SAVE plan yet – although most loan borrowers will be forced to do that sometime soon – you could just start to make payments towards the loan on a regular basis while it’s still in SAVE forbearance.”
However, since the SAVE plan is going away sooner or later it may make sense to switch repayment plans before too long. “If you are planning to pay your loans off, then you would likely want to pick your new repayment plan based on whichever plan would give you a monthly payment that would be ‘reasonable,’ that is affordable and maintainable, as you work towards payoff,” said Brinckerhoff.
The benefit to the standard repayment plan, she said, is that you wouldn’t need to worry about recertifying income each year and having your payment change.
The benefit to doing one of the IDR plans, by contrast, is that your payment could be more affordable if you had a lower income year than normal – but you also could end up having a higher payment if you had a higher income year.
“If you’re not planning to pay your loans off – whether you’re doing public service loan forgiveness (PSLF) or IDR forgiveness – then you’ll want to carefully analyze your different repayment plan options,” said Brinckerhoff. “The standard plan would typically not be a good fit for this situation, so you’re looking at the different IDR plans. Regardless of which one you pick, it would usually make sense to get out of the SAVE program now so these months start counting towards your overall loan forgiveness.”
Ultimately, what works best is highly nuanced depending on your income, assets, and financial goals. Brinckerhoff also advice SAVE borrowers to talk with a financial adviser, and specifically a Certified Student Loan Advisor, about how to incorporate student loans into a broader financial plan.
Of note, up-to-date information about how the settlement agreement will affect SAVE borrowers is available on StudentAid.gov/courtactions. Stay up-to-date on impacts from the One Big Beautiful Bill Act by visiting StudentAid.gov/bigupdates.