Education Department Sends Mass Warnings To Student Loan Borrowers To Change Repayment Plans, Or Else

Key Points:

• The Education Department has sent notices to up to 7.5 million borrowers enrolled in the SAVE plan, warning that the plan is being terminated following a court settlement and they must select a new repayment plan or be moved involuntarily to a Standard plan.
• Borrowers have a 90-day window starting around July 1, 2026, to choose a new repayment plan; failure to act will result in automatic placement in the Standard repayment plan, which may have higher payments and not qualify for loan forgiveness programs like PSLF.
• Borrowers do not need to act immediately upon receiving the recent email warnings, as the official 90-day period to switch plans has not started; some advocacy groups caution that the emails may be intended to pressure borrowers prematurely.
• It may be beneficial for some borrowers to switch plans before July if they can afford payments or want to pursue loan forgiveness, while others might wait until July 1 to access new repayment options like RAP or to delay payments despite accruing interest.
• A surge in plan change applications could worsen existing income-driven repayment (IDR) application backlogs, potentially causing delays and errors, so some borrowers may want to switch plans sooner to avoid processing issues; new regulations effective July 1, 2026, may also restrict eligibility for certain plans like PAYE, incentivizing earlier action.