Save student loan changes July 1. What borrowers should do now

what borrowers – Millions of federal student loan borrowers tied to the Biden-era SAVE plan face automatic changes starting July 1. With servicers set to contact borrowers around that date and give them 90 days to choose a new repayment option, experts say borrowers should rev

For many federal student loan borrowers, the calendar turns on July 1. Around that date. loan servicers are expected to contact borrowers leaving the Biden-era SAVE plan. and borrowers will have 90 days to choose a new repayment option. If they don’t act, the government will step in—often with payments that can jump.

More than 300,000 federal student loan borrowers have already exited the Saving on a Valuable Education, or SAVE, plan. But millions more remain under pressure as the July deadline nears, with the risk that procrastination could shrink choices and increase monthly payments under a standard plan.

Borrowers who are trying to keep costs down—or keep progress moving toward Public Service Loan Forgiveness or income-driven forgiveness—are being urged to look at their accounts and options before the transition happens automatically.

Before July 1, check your repayment options on studentaid.gov

With the switch approaching, borrowers are being told to go to studentaid.gov now and review the repayment plans available to them, rather than waiting for the government-led transition.

Stacey MacPhetres of Bright Horizons said borrowers are strongly encouraged to explore and apply for other income-driven plans before the deadline. Her point was direct: if borrowers do nothing, the repayment plan selection won’t be theirs.

“If you don’t act,” borrowers can end up placed into a plan that typically comes with higher monthly payments, MacPhetres warned.

For SAVE borrowers seeking forgiveness credit, staying in SAVE can stall progress

There’s another problem for borrowers counting on forgiveness credit. MacPhetres said borrowers in SAVE who are still making monthly payments should know those payments would not count toward Public Service Loan Forgiveness or income-driven repayment forgiveness.

For borrowers who want credit to keep moving. she said existing borrowers can immediately switch to IBR—income-based repayment—and doing so would allow payments to count toward PSLF and IDR forgiveness. For many, that switch could be the clearest action item tied to keeping forgiveness progress alive.

She also pointed out the financial tradeoff for those who aren’t making payments. For SAVE borrowers who aren’t paying, interest continues to pile up, she said.

Automatic enrollment after July 1 could mean a default plan built for payoff—not affordability

If borrowers do not act, the Education Department will automatically enroll some borrowers into one of the new plans launching July 1.

The likely outcome. according to MacPhetres’s description of how the system defaults. is that borrowers could be auto-enrolled into the Standard Repayment Plan. That plan features fixed monthly payments over a set period of time. with the goal of paying the loan completely off by the end of the term. The government’s pitch is that fixed payment schedules can reduce interest over the life of the loan. but the structure also means payments are fixed and potentially higher than what borrowers pay now—regardless of income.

That’s the tension borrowers are racing against: the process is designed to move loans to payoff, not necessarily to match day-to-day ability to pay.

After July 1, the menu for some borrowers shrinks sharply

The Education Department is also changing which repayment plans are available after July 1, and several current plans are being phased out or closed to new borrowers.

Enrollments for income-driven plans Pay as You Earn (PAYE), Income-Contingent Repayment (ICR), and Income-Based Repayment (IBR) will be cut off for loans disbursed on or after July 1. Existing IBR plans are grandfathered for older loans.

Starting July 1. only two repayment plans will be available to new borrowers: the Standard Repayment Plan and the Repayment Assistance Plan. or RAP. RAP is an income-driven plan with payments ranging from 1% to 10% of adjusted gross income. with forgiveness available after 30 years of repayment. For people making less than $10,000 a year, the plan sets payments at $10 a month.

For borrowers already in the system, the practical takeaway is smaller than it sounds on paper: what happens to their payments in the coming months may depend on a set of choices they make—or fail to make—before the automatic transition is triggered.

The switching point is July 1. and the clock starts ticking for borrowers who are still in SAVE or navigating the exit. Loan servicers are expected to contact borrowers around July 1, and borrowers will have 90 days to enter a new repayment option. Experts are urging borrowers to use the time before that window closes by checking studentaid.gov and reviewing what each plan actually does for monthly payments and forgiveness credit.

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