Millions of student loan borrowers currently experiencing a pause in their payments may soon find themselves facing new financial obligations, following a proposed settlement by the Trump administration. This development has raised urgent concerns among experts, who emphasize the need for borrowers to start planning for the upcoming changes.
The proposed settlement specifically affects those who enrolled in the Biden administration’s Saving on a Valuable Education (SAVE) plan but have remained in forbearance since the plan’s legal troubles surfaced. As of July, over 7.6 million borrowers were in this situation, a number outlined by the U.S. Department of Education. The specifics regarding when these borrowers will be required to resume payments remain unclear, as Trump administration officials have not provided a definitive timeline. Additionally, the Education Department did not respond to inquiries for clarification about the changes.
Experts warn that borrowers may only have a limited period to transition to a different repayment plan. Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York City, stated, “We don’t know exactly how long this is going to take, but borrowers should understand that they will likely have to make the transition from SAVE to a different repayment plan within months.”
The Department of Education plans to begin outreach to affected borrowers soon, indicating that a communication effort will be underway in the coming weeks.
Many individuals currently in SAVE forbearance do so because they enrolled under a program that was eventually put on hold due to ongoing legal challenges. Specifically, the 8th U.S. Circuit Court of Appeals halted the implementation of the SAVE plan after determining that the Biden administration lacked the authority to establish such a repayment program. As a result of these legal obstacles, many borrowers found themselves caught in a state of limbo and subsequently placed into forbearance in the summer of 2024. Reports suggest that a significant backlog of applications for new repayment plans under the current administration is contributing to these delays.
Earlier this month, Trump officials resumed interest charges for those who remain in the payment pause, further complicating the financial landscape for borrowers. Under previous guidance, the SAVE program was set to expire on July 1, 2028.
Given these recent developments, experts are advising borrowers to proactively explore options for resuming payments. Higher education expert Mark Kantrowitz suggests submitting requests for alternative income-driven repayment plans through StudentAid.gov. These plans can cap monthly payments based on discretionary income and offer debt forgiveness after a specified duration, typically ranging from 20 to 25 years.
Kantrowitz emphasizes that enrolling in the Income-Based Repayment plan (IBR) may be the most beneficial option for many borrowers. Changes implemented through recent legislation are set to phase out other plans, such as the Income-Contingent Repayment plan (ICR) and the Pay as You Earn plan (PAYE), by July 1, 2028. Starting in July 2026, a new repayment option called the “Repayment Assistance Plan” (RAP) will become available, leading to forgiveness after 30 years but likely resulting in the lowest monthly payment for some borrowers due to its extended timeline.
Several online tools are now available to assist borrowers in calculating their expected monthly payments under different repayment scenarios. Importantly, borrowers will have the flexibility to switch between plans as necessary.
For those participating in the Public Service Loan Forgiveness (PSLF) program, there is also the PSLF Buyback option, which allows borrowers to receive credit for months spent in SAVE forbearance, provided they were employed by a qualifying employer during that time.
In summary, as the situation evolves, it is crucial for student loan borrowers to stay informed and proactive regarding their repayment options to ensure a smooth transition back to regular payments.
