A major student loan deadline has passed for some borrowers enrolled in the defunct Saving on a Valuable Education (SAVE) repayment plan. The initial group of affected borrowers faced an October 29 deadline to select an alternative repayment plan following transition notices issued on July 1. Borrowers who missed the deadline face automatic enrollment in the Standard Repayment Plan or the new Tiered Standard Plan, depending on their loan structure.
However, experts emphasize that options remain available to mitigate potential fallout. Because loan servicers have distributed transition notices in waves, individual deadlines vary among borrowers, even those utilizing the same servicer. Millions of Americans have been forced to reconsider how they repay their federal student loans after the SAVE plan ended following a March court order.
Department of Education (ED) said in March that guidance would go to 7.5 million SAVE borrowers and that servicers would begin issuing individualized transition notices starting July 1. The ED says borrowers who do not choose another repayment plan by their deadline will be enrolled in a fixed-payment plan. Depending on a borrower's loans, that can mean the Standard Repayment Plan or Tiered Standard Plan.
Monthly payments under those plans are frequently higher than under an income-driven repayment plan, so missing the deadline can have considerable financial consequences. The ED initially told SAVE borrowers they would have at least 90 days after receiving their servicer notice to choose another repayment plan. Servicers began sending those notices July 1.
For the earliest group, however, an additional "final" notice effectively gave borrowers another 30 days to take action, pushing their deadline to October 29. Missing the deadline does not mean borrowers have permanently lost access to an income-driven repayment option. Borrowers can still apply for an alternative income-driven repayment plan after the deadline has passed.
A borrower also will not suddenly owe the new Standard-plan payment the day after the deadline as the ED said a loan servicer will provide the new monthly payment amount at least 21 days before the first payment under the new plan is due. For someone who has missed their deadline, the first steps are to check their loan-servicer account and StudentAid.gov account, determine which repayment plan they have been placed into, compare available repayment options and submit an application for the plan that fits their situation. Borrowers waiting for an income-driven repayment application to be processed may also have another option.
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