The Department of Education to millions of student-loan borrowers: Get off SAVE — and pay up.
The department announced on Friday that it will begin sending notices to the 7 million borrowers enrolled in the SAVE plan detailing theirnext steps for repayment.
Starting on July 1, according to the department, servicers will notify borrowers enrolled in SAVE that they have 90 days to select a new repayment plan and resume making payments. Borrowers who do not select a new repayment plan will be moved to a standard repayment plan, and loanservicers will notify them of their specific enrollment deadline.
“The 90-day period provides borrowers with ample time to explore repayment options that best suit their needs and plan accordingly,” the department said. “A borrower who wishes to transition before their loan servicer communicates a specific 90-day deadline may contact their servicer at any time to enroll in a lawful repayment plan.”
Nicholas Kent, the undersecretary of education, said in a Friday statement that borrowers will receive further guidance “over the next week.”
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“For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration’s policy is simple: if you take out a loan, you must pay it back,” Kent said.
SAVE was created by former President Joe Biden to give borrowers cheaper monthly payments and a shorter timeline to loan forgiveness. The plan had been blocked since the summer of 2024 due to litigation, and borrowers on it have not been required to make monthly payments. A federal judge recently approved a settlement with President Donald Trump and Missouri — one of the states that filed the litigation — to eliminate SAVE altogether.
The settlement allowed the administration to eliminate SAVE and move borrowers to new plans ahead of schedule. Trump’s “big beautiful” spending legislation, which included new repayment plans and borrowing caps, would have eliminated SAVE by 2028. The Department of Education said that SAVE borrowers will have the option to enroll in the new Repayment Assistance Plan, which is less generous than existing plans and allows for relief after 30 years.
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Student-loan borrowers are falling behind on payments at record levels.
A new report by left-leaning groups, the Century Foundation and Protect Borrowers, found that nearly 9 million student-loan borrowers — or one out of every five — are in default, which typically occurs after a federal borrower hasn’t made a payment for more than 270 days.
Additionally, the report said that one in four borrowers with a payment due is in delinquency, meaning they’re behind on payments, and those borrowers have seen their credit scores decrease by 57 points on average over the first three quarters of 2025. A drop in credit can cause borrowers to lose access to various forms of credit or loans, making it difficult to afford basic necessities, the report said.
This data follows President Donald Trump’s restart of collections for defaulted borrowers in May 2025 after a five-year pause. While the Department of Education announced in January that it was pausing wage garnishments and tax refund seizures for defaulted borrowers, it’s unclear when the pause will lift, and more borrowers could be at risk of facing those consequences.
The report said that the pause is “welcome” but “puts a band-aid on a serious wound.”
“Considering the nation’s worsening affordability crisis and unprecedented number of borrowers entering default, resuming garnishments would be cruel and economically reckless,” the report said.
Ellen Keast, the Department of Education’s press secretary for higher education, attributed the rise in delinquency and defaults to various relief measures that the Biden administration put in place, including the “on-ramp” to repayment, during which the department did not report any missed payments to credit agencies.
“The idea of a sudden increase in delinquencies in student loans is a misnomer — the Trump Administration is once again reporting full and accurate data on student loan repayment instead of extending so-called flexibilities related to a pandemic that ended five years ago,” Keast said. She added that the department “will continue to support regular, on-time repayment.”
Options for defaulted student-loan borrowers
The Department of Education released guidance on February 18, urging institutions to reduce student default rates. The guidance included updated nonpayment rates, which are the percentage of borrowers who entered repayment between January 2020 and May 2024 with federal student loans more than 90 days delinquent. Over 1800 institutions have nonpayment rates at or above 25%, the guidance said.
“Student borrowers have an obligation to repay their loans, but institutions also share a responsibility to ensure their students are prepared to enter repayment and understand the consequences of nonpayment,” Undersecretary of Education Nicholas Kent said in a statement. “Institutions cannot benefit from taxpayer dollars while ignoring the fact that a significant share of their students are not well-prepared to repay their loans.”
The department’s looming repayment changes could make things more difficult for some borrowers. Trump’s “big beautiful” spending legislation eliminated existing income-driven repayment plans and replaced them with less generous options, meaning borrowers will face longer timelines to loan forgiveness and likely higher monthly payments.
The department also announced a settlement to eliminate Biden’s SAVE plan, which would have allowed for cheaper monthly payments and a shorter timeline to relief. The report said that SAVE borrowers are “more financially fragile than the average borrower,” citing data from the Biden administration showing that more than half of them qualified for $0 monthly payments, putting them at greater risk of delinquency and default.
Student loan borrowers have a few options to get out of default. One option is loan rehabilitation, in which a borrower must contact their servicer and enter an agreement to make nine payments over 10 consecutive months. While wage and benefits garnishment will continue during this time, the default status will be removed from the borrower’s credit report once rehabilitation is complete.
Another option is loan consolidation, in which a borrower can apply to consolidate a defaulted student loan into a federal consolidation loan. After consolidation, the borrower would become eligible for federal benefits, but the default status would remain on the borrower’s credit history.
