Federal student loan borrowers enrolled in theBiden-era SAVE plan will need to select a new repayment option as of July 1, 2026. The plan, designed to base payments on income and family size, is ending following legal challenges from several states.
End of the SAVE Plan
The Saving on a Valuable Education (SAVE) plan was introduced in 2023 to make student loan repayment more manageable. Some borrowers had monthly payments as low as $0, depending on income. However, the plan faced pushback from Republican-led states, including Missouri, where loan servicer MOHELA is based.
An appeals court blocked the plan last year, ruling that the Department of Education exceeded its authority. Since July 2024, payments under SAVE have been paused, though interest has been accruing since August 2025.
What Borrowers Need to Do
Borrowers will receive notifications on July 1 with a deadline to switch to a new plan. Those who do not take action will automatically be enrolled in either the Repayment Assistance Plan (RAP) or the Tiered Standard Plan.
The RAP allows borrowers to pay over 30 years, with monthly payments based on income and family size. The Tiered Standard Plan offers repayment over 10 to 25 years depending on the loan balance. Both options could increase monthly payments by hundreds of dollars for some borrowers.
Other Repayment Options
Borrowers not taking out additional federal loans can opt for theIncome-Based Repayment (IBR) plan, which limits payments to 10% of discretionary income over a 20-year period. Monthly payments can decrease if income drops.
Two other plans, Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR), remain available for certain borrowers. PAYE is similar to IBR, while ICR requires 20% of discretionary income over 25 years. Both plans will be phased out in 2028.
The Federal Student Aid Office website provides tools for borrowers to compare all repayment options and determine which plan is most suitable for their financial situation.
Graduate Loan Limits
In addition to changes for SAVE plan borrowers, graduate student loan limits will be capped starting July 1 under the One Big Beautiful Bill Act. Graduate students will be limited to $20,500 per year and $100,000 total, while professional students will be limited to $50,000 per year and $200,000 total. The Graduate PLUS program will be phased out.
More than two dozen states, plus D.C., have challenged these limits in court. The changes could affect nursing programs and other non-professional graduate courses, potentially reshaping federal student lending for years to come.
