The Department of Education recently announced that student loan borrowers who were awaiting loan forgiveness decisions will soon need to select a new repayment plan due to final determinations by the Supreme Court.

Current Situation

The SAVE Plan was a federal student loan repayment program introduced in 2023 by the former White House administration to lower borrowers’ monthly payments and expand pathways to loan forgiveness before being struck down by a federal court.

According to the Department of Education, federal loan servicers will start issuing notices to borrowers on July 1 with instructions on how to transfer their loan balance from the SAVE Plan to one of the newly-approved repayment options. Borrowers will have a 90-day deadline to enroll in a new repayment option. (Servicers will notify borrowers of their specific 90-day deadline.)

Tips to manage the change

• Get familiar with your options. Borrowers currently enrolled in the SAVE Plan have approximately 6 months until their first payment under a revised repayment plan is due. Consider taking the next several weeks to learn about the different repayment options and which one fits best with your current financial situation.
  
  
• Compare income-driven options carefully. Not all plans calculate payments the same way, and small differences in how income is defined can lead to big changes in your monthly bill. Look closely at how each plan treats discretionary income, family size, and forgiveness timelines before deciding.
  
  
• Update your income and household information. Make sure your loan servicer has your most recent financial details. If your income has dropped or your family size has changed, you may qualify for a lower payment under a new plan.
  
  
• Don’t wait until the deadline. You’ll have a limited window to choose a new repayment plan once notices go out. Submitting your application early can help you avoid processing delays, missed payments, or being automatically placed into a plan that may not be the best fit.
  
  
• Consider making interest-saving moves now. While your loans may still be in forbearance, any voluntary payments you make can go directly toward your principal. Even small amounts paid now can dramatically reduce the total interest you’ll pay once regular repayments resume.
  
  
• Explore forgiveness and employer benefits. Some borrowers may qualify for programs like Public Service Loan Forgiveness, or can receive help through employer student loan repayment benefits. It’s worth checking eligibility now so you can align your repayment plan with any long-term forgiveness or assistance opportunities.
  
  
• Act like a banker. Remember, more money is made by the lenders when they get you to delay and lower your payment as much as possible. In fact, most interest earned on these loans happens in the first half of repayment. KNOW THIS and act accordingly. A good strategy might be to lower your monthly payment and then use the payment savings to front load principal payments.
  
  
• Find the loan crossover point. This is the point where more of your monthly payment goes toward principal rather than interest. If you haven’t reached yours, get there with a sense of urgency. A tremendous amount of interest expense can be saved for every dollar you pay down on the loan prior to this point.

Finally, remember to run a monthly amortization schedule based on your planned repayment to understand how much interest you’ll pay over the life of the loan AND on each payment. This will allow you to move from a defensive posture to one of managing your loan to your advantage.