The Repayment Plan You're On Expires July 1
Roughly seven million borrowers are sitting in SAVE, which stops existing at the start of next month. You get 90 days to pick something else. Do nothing and the Department picks for you, and its default choice is the expensive one.
A Deadline That Has Moved Before, and Is Not Moving Now
Anyone who has followed federal student lending over the past four years has learned to treat announced deadlines as provisional. Plans have been enjoined, unenjoined, paused, resurrected under new names, and litigated into a condition where the average borrower could be forgiven for concluding that nothing announced ever actually happens.
This one happens. The statute sets July 1, 2026 as the date by which the Department of Education must phase out SAVE and several companion plans, and the Department has been mailing notices to that effect. Roughly seven million borrowers are enrolled. That is not a group the servicing infrastructure can process thoughtfully, which is worth bearing in mind if you are inclined to wait and see what your servicer suggests.
The pattern here is familiar to anyone who watched the 2005 bankruptcy reform run-up or the flurry preceding any tax provision's sunset. A large population faces a hard date, most of them do nothing until the final fortnight, the phone lines collapse, and the people who moved in month one get the outcome they wanted while everyone else takes the default. The default, as usual, is not designed with the borrower's interests foremost.
What Replaces It
Two things arrive on July 1. The first is the Repayment Assistance Plan, or RAP, a new income-driven plan. The second is a restructured Tiered Standard Plan.
RAP sets the monthly payment between 1 and 10 percent of income, scaling with earnings. Lower earners land near the bottom of that band, higher earners near the top. This is a departure from the SAVE formula, which worked from discretionary income defined against a generous multiple of the poverty line. RAP works from a percentage of income directly, which makes it simpler to calculate and, for a good number of middle-income borrowers, more expensive.
I would not characterize that as a scandal so much as an unwinding. SAVE was the most borrower-favorable plan the federal system has produced, and the reversion was always going to feel like a penalty regardless of where it landed.
The Interest Subsidy Is the Provision Worth Reading
RAP carries an interest subsidy: make your full payment on time and your balance does not grow. Whatever accrued interest your payment fails to cover gets waived rather than capitalized.
Borrowers who have never experienced negative amortization tend to underrate this. Those who have will recognize it immediately as the whole ballgame. The defining indignity of income-driven repayment in its earlier forms was watching a balance climb for a decade while making every payment on schedule, which is a thing that corrodes a person's willingness to keep paying at all. A borrower with $60,000 at 6.5 percent owes roughly $325 a month in interest alone. Set an income-driven payment at $180 and the gap compounds. Under the older plans it compounded onto the principal. Under RAP it does not.
So the plan is less generous month to month and more honest year to year. Whether that trade favors you depends almost entirely on your income trajectory, which is the calculation nearly nobody runs and the one that actually decides this.
Ninety Days, Then the Department Chooses
Borrowers in SAVE receive a notice and then have 90 days to select a new plan. Let the window close and you are reassigned automatically, most likely to the Standard Repayment Plan.
Standard is a ten-year amortization. It is not indexed to your income in any respect. For a borrower whose income-driven payment was $180, the standard payment on the same balance runs closer to $680. The Department is not being punitive in selecting it; it is the statutory fallback. But it is a payment set without reference to whether you can make it, and a missed payment on it carries the same consequences as a missed payment on anything else.
The mechanical failure mode here is worth naming plainly, because it recurs in every one of these transitions. The notice goes to the email address on file with your servicer. Your servicer may have changed. The address may be one you stopped checking in 2021. The 90 days run from the notice, not from the day you happen to read it.
Log into studentaid.gov directly. Confirm who currently services your loans, confirm the contact information, and find out whether your clock has already started. That takes about ten minutes and it is the highest-return ten minutes available to a federal borrower this summer.
Forgiveness Is Still There, Further Away
Borrowers pursuing forgiveness need to look at the horizon rather than the monthly figure, because the horizons changed.
RAP runs to forgiveness over a substantially longer period than the 20 or 25 years borrowers came to expect under earlier income-driven plans. If you are eleven years into a 20-year clock, that is not an academic distinction. It is potentially another decade of payments on the same debt.
Public Service Loan Forgiveness is a separate matter and remains at 120 qualifying payments. If you work for a government or a qualifying nonprofit, PSLF is very likely still the dominant consideration and the plan question becomes which qualifying plan produces the lowest payment across your remaining months. Certify your employment before you switch anything. Payment counts have been miscounted at scale before, and the time to discover a discrepancy is while you still have years to fix it rather than at payment 119.
Consolidation Is a One-Way Door
A number of borrowers will be told to consolidate as part of moving plans. Sometimes that is right. It is also irreversible, and it resets things people forget it resets.
Consolidating restarts the forgiveness clock on the consolidated loan under most circumstances. A borrower fourteen years into an income-driven timeline who consolidates without understanding this has traded fourteen years of credit for administrative tidiness. There are weighted-average rules that preserve some progress in specific cases, and the specifics matter enormously.
Refinancing with a private lender is the more consequential version of the same door. The rate may be better. What you surrender is every federal protection at once: income-driven repayment, forbearance rights, the death and disability discharge, and any future relief Congress enacts. Given that the federal program has been rewritten twice in four years, surrendering optionality in exchange for a rate improvement strikes me as a poor trade for anyone whose income is not both high and stable.
The One Calculation Worth Doing in June
Pull your balance and your interest rate from studentaid.gov. Take your adjusted gross income from your most recent return. Run those through the loan simulator on the same site for RAP, for the tiered standard plan, and for whatever else you are eligible for, and write down three monthly payments and three total-repaid figures.
Then compare the monthly figures against what you can actually pay, and the total figures against each other. Those two comparisons answer different questions and both matter. The lowest monthly payment is frequently the highest lifetime cost, and if you are not pursuing forgiveness, lifetime cost is the number that governs.
Do it in June. In late September, seven million people will be doing it at once, on hold, with a deadline behind them. The borrowers who come out of this well will be the ones who treated a July date as a June problem, which is the same thing that has been true of every deadline in this program since 2022 and the same thing most people will decline to do again.