The U.S. Department of Education has begun notifying borrowers enrolled in the SAVE plan that they must exit the program, with a deadline as early as September 29. This follows a federal appeals court decision that terminated the SAVE initiative, which had over 6.9 million participants with an average debt of nearly $55,000.
Borrowers are encouraged to proactively switch to a new repayment plan, as failure to do so within the 90-day window will result in automatic placement into either the Standard Repayment Plan or the new Tiered Standard Plan, which could be more costly.
The new repayment landscape includes options like the Repayment Assistance Plan (RAP), which offers lower monthly payments based on income and leads to forgiveness after 30 years. Borrowers are advised to assess their financial situations and explore available repayment plans to avoid potential delinquency or default on their loans, which could lead to wage garnishments and other penalties.
The transition period is complicated by varying notification timelines from loan servicers, making it crucial for borrowers to stay informed and take action as needed