March 27, 2026 / 11:39 PM EDT / CBS/AP
More than 7 million — about 7.5 million — student loan borrowers enrolled in the Biden-era SAVE repayment plan will receive notices beginning Friday instructing them to choose a new repayment plan, the Education Department said. The department called the SAVE plan “illegal” after a federal court struck it down earlier this month.
Borrowers had been placed in forbearance since July 2024 while legal challenges proceeded. Starting July 1, loan servicers will begin issuing notices giving borrowers 90 days to select a new repayment plan. The available alternatives will mean higher monthly payments for most affected borrowers.
“The false promise of student loan forgiveness and artificially low monthly payments” were cited by the Education Department in describing the SAVE plan, and Under Secretary of Education Nicholas Kent said in a statement the guidance “puts the Biden Administration’s illegal student loan bailout agenda to rest once and for all” and emphasized the policy that “if you take out a loan, you must pay it back.”
The SAVE plan, launched under President Joe Biden, had reduced payments in some cases to as little as 5% of a borrower’s discretionary income and offered forgiveness for borrowers who made payments for at least 10 years and originally borrowed $12,000 or less. While courts considered challenges, borrowers in SAVE were not required to make payments, but interest began accruing after a court ruling last summer that blocked full implementation, meaning some balances have grown.
Alexis Arredondo, a first-generation college graduate from UCLA who earned a microbiology degree in 2024, said he struggled to find full-time work and relied on part-time and freelance jobs. He enrolled in SAVE upon graduation with about $40,000 in debt and said he now faces choosing between unaffordable higher monthly payments or a longer repayment term that increases interest costs. “It’s very difficult knowing where I’m going to be to able to get this money from,” he told The Associated Press.
Advocates and experts say borrowers have experienced repeated shifts in policy. Mike Pierce, executive director of the Student Borrower Protection Center, said borrowers have been promised fixes to a “broken student loan system” but now face limited options. Alexander Lundrigan of Young Invincibles called it a loss of “the most affordable plan option” amid an affordability crisis, noting recent changes by the Trump administration and Congress to repayment rules that will take effect over the next two years — including removing deferment for unemployment or economic hardship for new loans.
The Education Department said a new income-driven option called the Repayment Assistance Plan will be available starting July 1. That plan ties monthly payments to a borrower’s income and number of dependents and sets fixed repayment timelines between 10 and 25 years.
The U.S. Court of Appeals for the 8th Circuit struck down the SAVE plan earlier this month. The department’s notices will tell borrowers to enroll in a replacement plan and resume payments as soon as this summer. Servicers will contact borrowers in stages, every two weeks, with those who had been enrolled in SAVE the longest receiving notices first.