SAVE Plan Terminated Immediately: 7 Million Borrowers Forced to Switch Repayment Plans

The Biden administration’s signature student loan repayment plan has suddenly ended. The SAVE plan is now closed to all new borrowers. This change affects over 7 million Americans currently enrolled.

The termination results from a legal settlement with Missouri. The agreement was announced on December 9, 2025. Borrowers must now navigate a confusing transition to other plans.

Legal Settlement Accelerates Planned Phase-Out, Creating Chaos

According to reports from Forbes, the settlement forces an immediate halt. No new applications for the SAVE plan will be accepted. All pending applications are being denied.

This move dramatically speeds up the plan’s demise. Congress had previously set the termination for July 2028. Borrowers have lost nearly three years of expected relief.

The Department of Education must now contact millions of people. They must guide them to alternative income-driven repayment options. This process is expected to be slow and difficult.

Massive Servicer Backlogs Threaten Smooth Transition for Borrowers

The system is already overwhelmed. Data shows a backlog of over 800,000 income-driven repayment applications. Some borrowers have waited more than six months for processing.

Adding 7 million mandatory plan changes will strain this system further. Servicer call centers report extremely long wait times. Nearly half of all borrowers experience delays when seeking help.

A critical concern is forgiveness progress. Borrowers on SAVE earn credit toward loan discharge after 20 or 25 years. Switching plans risks losing that credit if delays occur.

The sudden SAVE plan termination creates immediate financial uncertainty for millions. Borrowers must proactively research their new options to avoid payment shock.

Thought you’d like to know

What is the SAVE plan and why is it ending?

The SAVE plan was an income-driven repayment program. It capped monthly student loan payments based on a borrower’s income and family size. It is ending due to a legal settlement with the state of Missouri.

What should I do if I am currently on the SAVE plan?

You should not wait for a notice. Log into your StudentAid.gov account now. Use the Loan Simulator tool to compare your new payment options under different plans.

Will my monthly payment increase when I switch plans?

Most likely, yes. The SAVE plan offered some of the lowest possible payments. Alternative plans like IBR or the Standard plan will likely result in a higher monthly bill for most borrowers.

Do I lose progress toward loan forgiveness?

The Education Department has not provided clear guidance on this. It is a major concern. You should contact your servicer and document all communication regarding your forgiveness timeline.

When is the deadline to switch plans?

There is no firm public deadline yet. The Department of Education says it will reach out to borrowers “in the coming months.” However, acting quickly is advised to avoid missing a payment.

What new plan is replacing SAVE?

There is no direct one-to-one replacement. Borrowers must choose from existing plans like Income-Based Repayment (IBR) or a new Repayment Assistance Plan (RAP) launching in July 2026.