The SAVE Plan Is Officially Over — and 7.5 Million Borrowers Are on a 90-Day Clock to Pick a New Plan Before the Government Picks a Costlier One for Them

What actually happened to SAVE

SAVE was struck down in court, and the shutdown is being executed in stages. The most important date for your wallet has already passed: as of August 1, 2025, interest resumed accruing on the roughly 8 million loans that had been sitting in SAVE's interest-free forbearance. That means every month you stay parked, your balance can grow even if your payment is still artificially paused.

The second date is the one on your notice. Beginning July 1, 2026, servicers started sending letters instructing SAVE borrowers to enroll in an approved plan within 90 days. If you don't act, you will be automatically moved — generally into the Standard plan or the new Tiered Standard plan, both of which are fixed-payment plans that ignore your income entirely. For a borrower who qualified for a low or $0 payment under SAVE, that auto-enrollment can mean a jump of hundreds of dollars a month, all at once.

Your four real options now

• Repayment Assistance Plan (RAP) — the brand-new income-driven plan, available since July 1, 2026. Payments run from 1% to 10% of your total adjusted gross income (minimum $10/month), with forgiveness after 30 years. It has two borrower-friendly quirks: any monthly interest your payment doesn't cover is waived, and if an on-time payment reduces your principal by less than $50, the government kicks in the difference up to $50.
• Income-Based Repayment (IBR) — the veteran income-driven plan that survived the law. Payments are based on discretionary income (income above a poverty-line threshold), capped so you never pay more than the Standard amount, with forgiveness after 20 or 25 years depending on when you borrowed.
• Tiered Standard plan — a new fixed-payment plan with a term of 10, 15, 20, or 25 years depending on your balance. Not income-based, but predictable.
• Standard plan — the classic 10-year fixed schedule. The fastest payoff and least total interest, but the highest monthly payment of the group.

RAP vs. IBR: how to tell which one wins for you

This is the decision most SAVE refugees are actually facing, and the two plans are not interchangeable. The core difference is what income they tax. IBR shields the income below a poverty-line threshold first, then charges a percentage of what's left — and it caps your payment at the 10-year Standard amount. RAP skips the shield and charges a flat 1%-to-10% slice of your entire AGI with no cap, but sweetens the deal with its interest waiver and $50 principal match.

The practical rule of thumb from the math: at lower incomes, IBR often wins, because the poverty-line deduction erases more of your taxable base and can drive the payment well below RAP's percentage-of-everything formula. At higher incomes, RAP's interest subsidy starts to matter more, and its longer 30-year horizon lowers the monthly number — at the cost of a decade of extra payments. A borrower earning $50,000 with no dependents might see only a modest monthly gap between the two, but a forgiveness timeline that differs by 5 to 10 years. Because the formulas hinge on your exact income, family size, and balance, this is a run-the-numbers decision, not a guess.

The tax trap hiding behind forgiveness

The federal tax exemption on forgiven student debt expired at the end of 2025. Loans forgiven in 2026 or later — including balances wiped out at the end of a 20-, 25-, or 30-year income-driven term — may now count as taxable income on your federal return. If you're years from forgiveness this is a planning note, not a panic; but factor a potential tax bill into any plan you choose for its forgiveness date.

A 5-step plan for the next 90 days

• Find the notice and note the deadline. Your 90-day clock starts from the date on your servicer's letter, not from July 1 — dig it out and mark the exact cutoff.
• Pull your numbers: current balance, interest rate, loan types, and your most recent AGI and family size. You'll need all of them to compare plans honestly.
• Model at least two plans side by side — typically RAP and IBR — using the Department of Education's Loan Simulator and a repayment calculator so you see both the monthly payment and the lifetime cost.
• Weigh monthly cash flow against total cost. The lowest payment is rarely the cheapest plan; a longer term almost always means more interest paid, even with subsidies.
• Enroll before the deadline — don't let auto-enrollment decide. Submit your application through your servicer and keep a confirmation, because falling into the Standard plan by default is the most expensive way to make this choice.

Why the default is the trap

The single most expensive mistake here is inaction. Doing nothing doesn't keep you in SAVE — SAVE is gone — it drops you into a fixed plan that takes no account of what you actually earn. For a household that budgeted around a low income-driven payment, an auto-enrollment into a 10-year Standard schedule on a $40,000 balance can mean a payment north of $400 a month appearing with little warning. Every one of the four options above is more deliberate than that, and three of them can be far cheaper month to month. The 90 days exist precisely so you can choose on purpose.