Millions of Americans with student loan debt are facing a potentially significant increase in their monthly payments, as the Biden administration’s income-driven repayment plan, known as SAVE, is being dismantled by the Trump administration. The move, stemming from a legal challenge brought by Republican states, threatens to push borrowers – many with limited incomes – onto repayment plans with substantially higher costs. This reversal impacts over 7 million borrowers currently enrolled in SAVE, raising concerns about financial strain and a potential surge in loan defaults.
The Department of Education has begun notifying borrowers via email that they have 90 days to switch to a different repayment plan. Those who fail to do so will automatically be re-enrolled in the Standard Plan, a ten-year repayment schedule with fixed monthly payments. Unlike SAVE, which bases payments on income and family size, potentially resulting in $0 monthly payments for some, the Standard Plan typically carries the highest monthly costs. According to estimates from CNET, some borrowers could observe their payments increase by more than $300 per month, disproportionately affecting those with the lowest incomes. CNET provides a calculator to estimate potential payment increases.
The Demise of SAVE and the Legal Battle
The Saving on a Valuable Education (SAVE) plan, launched by the Biden administration, was designed to make student loan repayment more affordable, particularly for low- and middle-income borrowers. Approximately 4.5 million SAVE enrollees earn between 150% and 225% of the federal poverty level, qualifying them for potentially zero-dollar monthly payments. However, the plan faced legal opposition from several Republican-led states, arguing that it exceeded the administration’s authority. In December, the Trump administration settled with these states, effectively ending the SAVE program.
The legal challenge centered on the administration’s use of the Higher Education Act to create the SAVE plan. Opponents argued that the plan constituted an unlawful overreach of executive power. The settlement requires the Department of Education to discontinue the SAVE plan and revert to previous repayment structures. This decision reverses a key component of President Biden’s broader student loan relief efforts, which have faced numerous legal hurdles.
Processing Delays and Future Uncertainty
Even for borrowers attempting to switch to alternative repayment plans, the process is proving difficult. The Department of Education is reportedly struggling to handle the influx of applications, processing only around 250,000 per month. This backlog means many borrowers are facing lengthy delays, with some waiting months for a response. This creates a significant challenge for those seeking to avoid the higher payments of the Standard Plan.
Adding to the confusion, the landscape of student loan repayment is set to change again in July 2028. A recent Republican-backed budget law will dissolve all but one repayment program, leaving only a single income-driven plan. While this remaining plan will similarly be income-based, it is expected to be less generous than SAVE, resulting in higher monthly costs for borrowers. This ongoing instability creates a climate of uncertainty for millions of Americans managing student loan debt.
Rising Delinquency Rates and Economic Impact
The changes to student loan repayment come at a time of increasing financial hardship for many Americans. A report released last month by the Century Foundation and Protect Borrowers revealed that nearly 9 million student loan borrowers are already in default. The report details a sharp increase in delinquency rates during the first year of the current administration, jumping from roughly zero to 25%.
The report links these rising delinquency rates to policies implemented by the administration that restricted access to affordable income-driven repayment plans. Specifically, the Department of Education halted application processing for three months and denied over 328,000 applications in August 2025, leaving a backlog of 734,000 unprocessed applications as of December 31, 2025. Defaulting on student loans can have severe consequences, including a significant drop in credit scores – averaging 57 points, pushing approximately 2 million borrowers into “subprime” territory – and increased difficulty securing housing, employment, and affordable loans.
Protect Borrowers estimates that the average family will pay more than $3,000 per year in additional costs as a result of the end of SAVE. This financial burden is compounded by broader economic pressures, including rising energy costs linked to geopolitical instability and the administration’s trade policies. Senator Elizabeth Warren (D-Mass.) described the situation as “shameful,” highlighting the affordability crisis facing many Americans. Her statement on X (formerly Twitter) underscored the impact on those already struggling financially.
What’s Next for Student Loan Borrowers?
The Department of Education has established a website with information about repayment options and the transition away from SAVE. Borrowers are encouraged to explore these options and submit applications for alternative plans as soon as possible. However, given the current processing delays, timely action is crucial. The future of student loan repayment remains uncertain, with ongoing legal challenges and potential legislative changes on the horizon. The next significant date to watch is July 1, 2028, when the remaining repayment programs will be consolidated, further reshaping the landscape for student loan borrowers.
This situation is evolving rapidly. We encourage readers to stay informed and to share their experiences with student loan repayment. Your insights can facilitate shed light on the challenges facing millions of Americans.
