7M Student-Loan Borrowers May Be Put on Most Expensive Repayment Plan

Key Points:

• Starting July 1, the Department of Education will notify student-loan borrowers on the SAVE plan to transfer to new repayment plans following the elimination of SAVE by the Trump administration, which previously offered cheaper payments and faster debt relief.
• Borrowers who do not choose a new plan within 90 days will be automatically placed in either the standard repayment plan or a new tiered standard plan, both of which are more expensive than current income-driven repayment options.
• The new tiered standard plan requires full repayment based on the principal balance with a minimum $50 monthly payment, while the Repayment Assistance Plan (RAP) calculates payments based on adjusted gross income but is still costlier than existing income-based plans.
• Over 60 Democratic lawmakers have urged the Department of Education to automatically enroll SAVE borrowers into the cheapest available repayment plan to avoid significant payment increases for those who miss the deadline.
• Additional changes from the Trump-era "big beautiful" spending legislation, including new borrowing caps on advanced degrees and altered parent borrowing limits, will soon take effect to help prevent borrowers from accumulating unmanageable debt.