The SAVE Plan Is Ending: Deadlines, New Plans, and Payments

The SAVE plan is ending, and if you were enrolled or had an application pending, you need to choose a new repayment plan before your loan servicer picks one for you. A federal court approved a settlement on March 10, 2026, that formally shut down the Saving on a Valuable Education plan, and the Department of Education is now moving every SAVE borrower into a different plan.¹ Doing nothing is the most expensive option available to you.

Your Deadline and What Happens If You Miss It

Starting July 1, 2026, loan servicers begin sending notices to SAVE borrowers. Each notice starts a 90-day clock. Within that window you must select a new repayment plan. If you don’t respond, your servicer will automatically move you into the Standard Repayment Plan or the new Tiered Standard Plan.¹

The Standard Repayment Plan divides your balance into fixed monthly payments over ten years. If you chose SAVE because your income was low relative to your balance, that fixed payment will almost certainly be much higher than what you were paying. Borrowers who were already placed in forbearance during the SAVE litigation don’t have to wait for the July notice. You can apply for a new income-driven plan today at StudentAid.gov.²

Given the number of borrowers moving off SAVE at the same time, processing delays are likely. Apply well before your 90-day window closes so you aren’t defaulted into the Standard Plan while your income-driven application sits in a queue.

Which Income-Driven Plans You Can Switch To

Three income-driven repayment plans are still available. All three require Direct Loans (or eligible consolidation loans), and all three come with the same cutoff: borrowers who take out new loans or consolidate on or after July 1, 2026, will not be eligible for any of them.²

Income-Based Repayment (IBR). Payments are 10% of discretionary income if you first borrowed on or after July 1, 2014, or 15% if you borrowed before that date. Discretionary income is what you earn above 150% of the federal poverty guideline. Forgiveness comes after 20 years of qualifying payments for newer borrowers, 25 years for earlier ones.
Pay As You Earn (PAYE). Payments are 10% of discretionary income using the same 150% poverty threshold, but capped at whatever you’d owe under the 10-year Standard Plan. Forgiveness after 20 years. Only borrowers with certain Direct Loans taken out between 2007 and 2026 qualify.
Income-Contingent Repayment (ICR). Payments are 20% of discretionary income, and the income protection threshold is only 100% of the poverty guideline instead of 150%. Forgiveness after 25 years. This is generally the last-resort option, useful mainly for parent borrowers who consolidate first.

For most borrowers with undergraduate debt, IBR at 10% or PAYE will produce the lowest monthly payment. Using the 2026 federal poverty guideline of $15,960 for a single-person household, 150% works out to $23,940.³ A single borrower earning less than that would owe $0 per month under IBR or PAYE.

Before you apply, run your numbers through the Loan Simulator at StudentAid.gov to compare how each plan changes your monthly payment and total repayment cost.⁴

What Will Change in Your Monthly Payment

SAVE protected more of your income than any other plan. It shielded everything below 225% of the federal poverty guideline, which for a single borrower in 2026 works out to $35,910.³ Under IBR or PAYE, that threshold drops to 150% of the guideline, or $23,940 for a single filer. Everything you earn above the lower threshold now counts toward the payment calculation.

The payment rate is changing too. SAVE charged undergraduate-only borrowers 5% of discretionary income, graduate-only borrowers 10%, and mixed borrowers a weighted average between the two based on original principal balances.⁵ IBR and PAYE both charge 10% regardless of whether your debt funded undergraduate or graduate study. Borrowers with undergraduate-only loans should expect the steepest jump.

Interest Will Start Growing Again

SAVE’s most distinctive feature was its full interest subsidy. If your calculated payment didn’t cover the interest accruing each month, the government waived the rest. Your balance never grew as long as you made your scheduled payment, even at $0. The court order specifically vacated that provision.²

Interest works less favorably under what remains. IBR and PAYE cover unpaid interest on subsidized loans for the first three years only. After that, or on unsubsidized loans from day one, any interest your payment doesn’t cover gets added to your balance. ICR offers no interest subsidy at all. If your income is low enough that your payment doesn’t cover the monthly interest, your balance will grow.

Forgiveness: What Still Counts, What Doesn’t

Forgiveness timelines on the remaining plans reset the expectations SAVE set:

IBR, borrowed on or after July 1, 2014: 20 years of qualifying payments
IBR, borrowed before July 1, 2014: 25 years
PAYE: 20 years
ICR: 25 years

The SAVE plan also included an accelerated path: borrowers who originally took out $12,000 or less could receive forgiveness after just 10 years. That provision was vacated with the rest of the plan. If you were counting on it, you’re now on the standard 20- or 25-year clock under whichever plan you pick.²

Payments and time you already accumulated aren’t necessarily lost. One narrow provision from the July 2023 rule survived the court order: time spent in qualifying deferments and forbearances, including the SAVE-related forbearance, can still count as progress toward discharge under other income-driven plans. Log into your account at StudentAid.gov to confirm how your payment count was handled during the litigation period.²

How to Apply

Use the same Income-Driven Repayment Request form at StudentAid.gov/idr that you would have used for SAVE. Log in with your FSA ID. The form asks for your most recent federal tax information, and you can authorize the IRS to share it directly with the Department of Education. That authorization also enables automatic annual recertification, so you don’t need to update your income manually each year.⁴

You’ll also report your family size, which includes you, your spouse if applicable, and anyone who receives more than half of their financial support from you.⁶ A larger family size raises the poverty threshold used in the formula and lowers your monthly payment. If your last tax return doesn’t reflect your current income (a recent job loss, for example), you can submit alternative documentation like recent pay stubs.

Married Borrowers

How you file taxes affects your payment. File jointly and your servicer uses combined household income, then prorates the total payment based on each spouse’s share of the couple’s federal loan debt. Owe 60% of the couple’s balance on a $600 calculated payment, and your share is $360.⁷

File separately under IBR or PAYE and only your individual income counts, which can drop your payment substantially if your spouse earns more. The trade-off: married-filing-separately status disqualifies you from the student loan interest deduction and several other tax benefits. Borrowers in community property states face an extra wrinkle where household income may still be split in half for repayment calculations. Run the numbers both ways before you file.

Parent PLUS and Defaulted Loans

Parent PLUS loans are excluded from IBR and PAYE entirely. The only income-driven option for parent borrowers is ICR, and only after consolidating the PLUS loans into a Direct Consolidation Loan. The consolidation must happen before July 1, 2026, and ICR enrollment must be complete by July 1, 2028.⁸

Loans in default are not eligible for any income-driven plan until the default is resolved. The two paths are loan rehabilitation, which removes the default after a series of agreed-upon payments, or consolidation into a new Direct Consolidation Loan.⁹ Either restores your access to income-driven repayment.

Taxes on Future Forgiveness

If you eventually reach the 20- or 25-year forgiveness mark, the discharged balance is generally treated as taxable income starting in 2026. The American Rescue Plan Act temporarily excluded most student loan forgiveness from federal taxes, but that exclusion applied only to loans forgiven between January 1, 2021, and December 31, 2025.¹⁰

Public Service Loan Forgiveness remains tax-free, and a separate permanent exclusion applies to loans discharged due to the borrower’s death or total and permanent disability.¹¹ For everyone else, the IRS treats the forgiven amount as ordinary income in the year of discharge. Borrowers who are insolvent at that moment (total debts exceed total assets) can exclude some or all of it by filing IRS Form 982 with their return. State tax treatment varies, so check with your state tax agency as your forgiveness date approaches.

Key Dates to Remember

July 1, 2026: Servicers begin sending notices; also the cutoff after which new loans or consolidations lose eligibility for IBR, PAYE, and ICR.
90 days after your servicer’s notice: Your personal deadline to pick a plan before auto-enrollment in Standard or Tiered Standard.
July 1, 2028: Final deadline for Parent PLUS consolidation borrowers to enroll in ICR.

1
U.S. Department of Education. U.S. Department of Education Announces Next Steps for Borrowers Enrolled in Unlawful SAVE Plan
2
Federal Student Aid. IDR Plan Court Actions: Impact on Borrowers
3
U.S. Department of Health and Human Services. Poverty Guidelines
4
Federal Student Aid. Apply for or Manage Your Income-Driven Repayment Plan
5
U.S. Department of Education. Transforming Loan Repayment and Protecting Borrowers Through the New SAVE Plan
6
Federal Student Aid. Income-Driven Repayment Plan Request
7
Federal Student Aid. 4 Things to Know About Marriage and Student Loan Debt
8
eCFR. 34 CFR 685.209 – Income-Driven Repayment Plans
9
Federal Student Aid. Student Loan Rehabilitation for Borrowers in Default: FAQs
10
Taxpayer Advocate Service. What to Know About Student Loan Forgiveness and Your Taxes
11
Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness