Student Loans: SAVE plan Faces Potential Changes, Borrowers Advised to Prepare
The future of the Saving on a Valuable Education (SAVE) student loan repayment plan remains uncertain as settlement discussions continue between states opposing the plan and the Trump administration. A joint status report filed last month indicated that talks, previously paused due to a lapse in appropriations, have resumed. Parties involved aim to finalize a settlement agreement and submit a further report on or before December 15, 2025.
Currently, the SAVE plan is legally blocked, and interest on student loans restarted on August 1st. This advancement could lead to increased monthly payments and possibly negate years of anticipated relief for borrowers.
Financial experts are urging those currently enrolled in SAVE to proactively assess their options. Michael Ryan, founder of MichaelRyanMoney.com, described the coming weeks as a “wake-up call,” warning that the promised relief may not materialize. He explained that borrowers could face higher bills, accruing interest, and a longer path to loan forgiveness. “What was once marketed as relief is now back to business as usual,” Ryan stated, adding that the change could be a significant setback for those building financial stability based on the planS benefits.
Several financial professionals weighed in on the potential consequences of the SAVE plan’s demise. Kevin Thompson, CEO of 9i Capital Group, noted that even with loans currently in forbearance, interest is accumulating. He anticipates that borrowers might potentially be limited to Income-Based Repayment (IBR) or Repayment Acceleration Program (RAP) plans, which generally require longer repayment periods and may not credit past forbearance towards forgiveness.
Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, predicts that borrowers will likely be shifted to older repayment options like IBR, PAYE, or ICR, which typically result in higher monthly payments. He also highlighted upcoming changes to federal law, scheduled to phase out SAVE, PAYE, and ICR by 2028, replacing them with a new Repayment assistance Plan.While the impact on all borrowers remains unclear, Beene believes many will likely face increased payments due to more stringent assistance plan rules.
Ryan reiterated the need for immediate action, advising SAVE enrollees to “treat the coming months as a planning window,” comparing income-based repayment options, and running calculations to understand potential costs under option plans.
If a settlement is reached and the SAVE plan is discontinued, borrowers will be required to select a different repayment plan. Thompson emphasized a Republican focus on loan repayment, suggesting that while some may see slightly lower monthly payments, most will face longer repayment timelines and delayed forgiveness.
