Your Student Loan Plan Vanishes July 1: The 90-Day Clock on 7.5 Million SAVE Borrowers — and the One Move That Cuts Your Rate a Full Point

What actually changes on July 1

Three repayment plans are being retired for existing borrowers by 2028: SAVE, PAYE (Pay As You Earn), and ICR (Income-Contingent Repayment). In their place, two new plans go live July 1, 2026. The first is the Repayment Assistance Plan (RAP), a new income-driven plan that sets your bill as a slice of your adjusted gross income. The second is the Tiered Standard plan, a fixed-payment plan whose term stretches from 10 to 25 years depending on how much you owe.

The change traces back to last year's budget law, which collapsed a tangle of repayment options into a smaller, simpler menu. The trade-off is that the generous terms many borrowers signed up for under SAVE — including some of the lowest income-driven payments ever offered — don't survive the transition. Going forward, RAP is also the only income-driven plan that will count toward Public Service Loan Forgiveness, so public-sector workers chasing PSLF need to pay close attention.

The 90-day clock: what SAVE borrowers must do

Starting July 1, the Department of Education and loan servicers begin notifying the 7.5 million borrowers enrolled in SAVE. Once your notice arrives, you have 90 days to choose a new plan. Miss the window, and you don't get to keep paying nothing — you're automatically moved into a standard repayment plan, which generally carries a higher monthly bill than any income-driven option.

The practical takeaway: don't wait for the auto-placement to decide for you. The standard plan you'd be dropped into is built around paying the loan off on a fixed schedule, not around what fits your budget. If your income is modest relative to your balance, an income-driven plan like RAP will almost always produce a lower monthly payment — but only if you actively elect it inside the 90-day window.

RAP vs. Tiered Standard: how the two new plans work

• RAP (Repayment Assistance Plan): Your payment is a percentage of your adjusted gross income, scaling from roughly 1% for the lowest earners up to 10% for higher incomes, with a floor of just $10 a month. Like SAVE, it cancels any unpaid interest each month as long as you keep paying, so your balance won't balloon. Remaining debt is forgiven after 30 years of qualifying payments — longer than most old IDR plans, but it's the only IDR option that counts toward PSLF.
• Tiered Standard plan: A fixed-payment plan with a term set by your balance — 10, 15, 20, or 25 years. Smaller balances get the shorter terms; larger balances qualify for the longer ones. Your balance and interest are split into equal monthly payments across that term. It's predictable and pays the loan off faster, but the monthly bill is not tied to your income.
• Rule of thumb: if your payment under a fixed plan would strain your budget, RAP's income-based formula and interest cancellation are the safety net. If you can comfortably afford the fixed payment and want to be done sooner with less total interest, the Tiered Standard plan gets you there.

The 1% auto-pay discount almost nobody has claimed

Here's the part of the overhaul that's pure upside. The long-standing 0.25% interest discount for enrolling in automatic payments is quadrupling to a full 1 percentage point, effective July 1, 2026. On a $38,000 balance at 6.5%, knocking a point off the rate trims hundreds of dollars in interest a year — and it costs you nothing but setting up auto-pay.

The catch is enrollment. The 1% reduction runs through June 30, 2028, but you have to be enrolled in auto-pay by September 30, 2026 to lock it in, and it applies to Federal Direct Loans that originated after July 1, 2012. The opportunity is real because the participation gap is wide: auto-pay enrollment had slipped to around 40% of borrowers by late 2025, down from about 83% before the pandemic pause. That means a majority of borrowers are currently leaving the biggest no-strings discount in the system on the table.

New borrowing caps if you're still in school

• Graduate students: borrowing capped at $20,500 per year and $100,000 over a lifetime.
• Professional students (law, medicine, etc.): $50,000 per year and $200,000 lifetime.
• Overall federal student loan lifetime limit: $257,500 per borrower.
• Parent PLUS loans: new borrowing capped at $20,000 per year per student, with a $65,000 lifetime cap per student.
• The separate Grad PLUS program, which let graduate students borrow up to the full cost of attendance, is being eliminated — a major shift for anyone funding an expensive graduate degree.

Your move before the window closes

Do two things now: (1) Enroll in auto-pay before September 30, 2026 to lock in the 1% interest cut — it's free money and applies regardless of which repayment plan you choose. (2) The moment your SAVE transition notice lands, compare your projected RAP payment against the Tiered Standard payment before the 90-day clock runs out. Picking on purpose almost always beats getting auto-placed.