Federal Student Loan Borrowers Face New Repayment Plan Deadlines

Deadline for Federal Student Loan Borrowers

Federal student loan borrowers previously enrolled in the now-discontinued Saving on a Valuable Education (SAVE) repayment plan have a deadline approaching to select a new repayment option. Failure to choose a new plan may result in automatic enrollment in a different payment plan.

The first deadlines for some borrowers arrive on September 29, which marks 90 days after loan servicers began sending notices on July 1. Borrowers were contacted in waves, and each has a unique deadline based on when they received their notice. The SAVE plan ended earlier this year following a federal court order. The U.S. Department of Education stated that borrowers who do not select a new repayment plan within the time frame will be placed in the Standard Repayment Plan or the new Tiered Standard Plan.

“If you miss the 90-day window in your servicer notice, you can be automatically placed into the Standard or Tiered Standard Repayment Plan, where the payment is based on your loan balance rather than your income,” Kaydee Ambas, consumer finance educational instructor at Earnest, explained.

This transition might lead to higher monthly payments, as the default options do not consider each borrower’s financial ability.

Who Needs to Act Now?

Immediate action is required for SAVE borrowers who received notices at the start of July. A notice dated July 1 results in a deadline of September 29. Notifications received later have subsequent deadlines, likely falling within the next few months. Loan servicers have different schedules for contacting borrowers. MOHELA is reaching out to borrowers between July and October, providing a 90-day period to choose a repayment plan. Edfinancial sent out notices from July 1 to August 15.

Ambas advised, “With the first deadline approaching, borrowers should log in to their servicer account, confirm their specific date, and use the federal Loan Simulator to compare what IBR, RAP, and standard repayment would cost them each month.”

Federal Student Aid’s repayment calculator allows borrowers to assess eligible plans, detailing estimated monthly payments and total repayment over the loan’s lifespan.

Consequences of Inaction

If borrowers miss their deadlines, they will transition out of the SAVE plan. Their servicers will move them to a Standard Repayment Plan or a Tiered Standard Plan based on loan details and disbursement dates. For loans disbursed before July 1, 2026, the Standard Plan typically involves ten years of fixed payments. The Tiered Standard Plan, introduced on July 1, offers 10, 15, 20, or 25-year fixed repayment terms based on the owed amount.

Available Repayment Options

John Wittelsberger, a certified financial planner, stated that the Standard Plan suits borrowers who want fixed payments and a defined repayment timeline. Higher earners may benefit from reduced interest compared to longer repayment periods.

“The standard repayment plan works exactly as it sounds. Payments are fixed, the payoff timeline is clearly defined, and the loan balance steadily declines toward a known endpoint,” he told Newsweek.

The new Repayment Assistance Plan (RAP), available since July 1, adjusts payments based on adjusted gross income and dependents on the tax return. Payments range from $10 monthly to 10% of adjusted income, reduced by $50 per dependent. The plan may extend to 30 years.

Wittelsberger noted, “Used intentionally, RAP can preserve flexibility and support parallel goals like investing, homeownership, or family planning.”

Income-Based Repayment (IBR) is another option. IBR payments are typically 10% or 15% of discretionary income, depending on loan origination, and are capped at the amount owed under a 10-year Standard Plan. Remaining balances may be forgiven after 20 to 25 years, subject to eligibility based on loan type and disbursement date.

Federal Student Aid advises borrowers to check their StudentAid.gov dashboard to confirm loan types and disbursement dates, as these affect available repayment options.