Brief
US borrowers must choose new loan plan after SAVE program ends
The Department of Education says borrowers have 90 days to select a new plan, with many expecting payment jumps of $500 or more.
By Felo News Desk · Published
Federal student‑loan borrowers on the now‑defunct SAVE repayment plan must select a new repayment option by December, the Department of Education said, after a federal appeals court struck down the program in March.
What happened
About 7.5 million borrowers who were on SAVE will receive emails from their loan servicers by December informing them they have 90 days to choose a new plan. The Student Debt Crisis Center estimates roughly half of those borrowers will see monthly payments rise by at least $500.
What the reports add
The Independent notes that more than 1.75 million borrowers have already picked new plans as of Friday, according to a Department of Education spokesperson, Ellen Keast. The median payment under SAVE was $110; the new median estimated payment is $560, and borrowers who miss the deadline will be placed in the Standard Repayment Plan with a median payment of $674.
What was said
Ellen Keast told The Independent in an email that the department is notifying borrowers of the deadline. Student‑loan coach Matt Elston said income‑driven plans still exist but generally do not match SAVE’s low payments. Certified financial planner Eddy Jurgielewicz said a version of SAVE’s interest‑waiver feature lives on in the Repayment Assistance Plan.
How it came about
The SAVE plan, introduced to lower monthly payments for borrowers, was invalidated by a federal appeals court in March. The Department of Education is now guiding borrowers toward eight available federal repayment plans, including four income‑driven options and four with fixed payments up to 30 years.
Key facts
- 7.5 million borrowers on the SAVE plan must choose a new repayment plan by December. (independent.co.uk)
- Half of those borrowers could see monthly payments increase by at least $500. (independent.co.uk)
- The median payment under SAVE was $110; the new median estimated payment is $560. (independent.co.uk)
- Borrowers who miss the 90‑day deadline will be placed in the Standard Repayment Plan with a median payment of $674. (independent.co.uk)
Sources
- [1] independent.co.uk — originally reported as “Millions of student loan borrowers face huge payment shock — here’s what is changing”
