It is a tumultuous time for millions of student loan borrowers as repayment plans and loan forgiveness undergo some of the most significant changes in a generation. In light of these reforms, many borrowers will likely need to consider switching plans or otherwise modifying their repayment approach in the coming months.
The changes are happening on multiple fronts. Court challenges have thrown elements of several income-driven repayment program, including the SAVE plan and IDR student loan forgiveness, into disarray. Administrative problems and loan servicing issues have compounded application backlogs. Policy decisions by the Trump administration, such as the resumption of interest accrual for borrowers in the SAVE plan forbearance, have put pressure on borrowers to switch programs. And the “Big, Beautiful Bill” signed into law by President Trump last month will result in huge changes to the federal student loan system in the coming months and years.
While some student loan borrowers will get to keep their repayment plan and may not have to take action, others may want to consider applying (or reapplying) to switch plans. Here’s a breakdown.
Student Loan Borrowers Enrolled In The SAVE Plan
The SAVE plan, a Biden-era income-driven repayment program that was created to reduce monthly payments and halt runaway balance growth associated with interest accrual, has been blocked for more than a year due to a lawsuit filed by a group of Republican-led states. As a result, around eight million borrowers were forced into an administrative forbearance, which hasn’t counted toward student loan forgiveness. The SAVE plan hasn’t been formally overturned yet, but a federal appeals court blocked the program last year. And in a subsequent ruling issued last spring, the court signaled a likelihood that the program will ultimately get overturned.
In the meantime, the Trump administration restarted interest accrual for borrowers in the SAVE plan forbearance starting this month, arguing that doing so was required by a court order (although critics have disputed this, noting that no court explicitly ordered the Department of Education to resume interest). In addition, President Trump’s “Big, Beautiful Bill” will ultimately repeal the SAVE plan by 2028, if the courts don’t overturn it first.
Taken together, this means that borrowers currently in the SAVE plan forbearance should start thinking about switching repayment plans. While it’s possible that borrowers may not need to change plans until SAVE is phased out in July 2028, most observers expect that borrowers will have to make a change much sooner than that. And the resumption of interest accrual only adds pressure to borrowers to apply to switch repayment plans, as their loan balances are now increasing even though no payments are due.
“The Department urges all borrowers in the SAVE Plan to quickly transition to a legally compliant repayment plan,” said Secretary of Education Linda McMahon in a statement last month announcing that interest would start accruing again.
“As of March 26, 2025, the online IDR application is once again available and servicers are processing applications for eligible borrowers to apply for the Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR) Plans,” says Department of Education guidance on its website.
But SAVE plan borrowers should be aware that they may have much higher payments under IBR, PAYE, and ICR compared to SAVE, especially if their income has increased since the last time they certified their earnings. And these alternative income-driven repayment plan options don’t have the same interest savings benefits as SAVE.
Student Loan Borrowers Who Have Pending Applications For SAVE Or The Lowest Payment
Student loan borrowers who applied to SAVE, but were never able to enroll because the court injunction blocked the program before they were accepted into the plan, should also consider applying for a different income-driven plan. While SAVE remains blocked, the department cannot process applications for borrowers who selected SAVE. Instead, these borrowers should consider applying for ICR, IBR or PAYE (if they qualify). The Big, Beautiful Bill also creates a new income-driven option called the Repayment Assistance Plan, or RAP. But RAP likely won’t be available until sometime next year.
The same is true for borrowers who selected an option on their IDR application for their servicer to select the repayment plan with the lowest possible monthly payment. The Department of Education has determined that these applications cannot be processed in light of the SAVE plan injunction, and as a result, they will ultimately be rejected. Borrowers who selected the “lowest possible payment” option on a pending IDR application should, therefore, reapply for one of the three available options – ICR, IBR, or PAYE.
Student Loan Borrowers Who Applied Before May
In addition, student loan borrowers who applied for any income-driven repayment plan prior to May of this year should consider reapplying. The Department of Education has indicated that there is a massive backlog of 1.5 million IDR applications, but many were submitted with tax returns and other income documents that borrowers had to manually upload with their applications because an online data sharing tool with the IRS was not functioning. In May, that IRS tool was restored. The tool allows for much faster automated processing of IDR requests because the Department of Education can simply import a borrower’s income information from a borrower’s federal tax return via the IRS.
The department is encouraging borrowers who submitted an IDR application prior to the restoration of the IRS data retrieval tool to reapply online at StudentAid.gov. Doing so may expedite processing, and should automatically cancel any previously-submitted application.
“Applying for an IDR Plan is quick and easy if borrowers provide consent for the Department to obtain their federal tax information directly from the Internal Revenue Service,” said the department in a statement in July. “This allows the Department to process borrowers’ IDR applications faster and eliminates the need for borrowers to manually upload their income information.”
Student Loan Borrowers On The PAYE Or ICR Plans
Student loan borrowers who are currently enrolled in the PAYE and ICR plans can continue in these plans for the time being. But under the Big, Beautiful Bill, these repayment programs will be phased out by July 1, 2028, and possibly sooner than that. Once that happens, borrowers enrolled in PAYE and ICR will need to switch either to the Income Based Repayment plan (which is preserved under the legislation), or the new RAP plan, which may have lower monthly payments but also requires more years in repayment before a borrower can reach student loan forgiveness eligibility.
For now, borrowers in PAYE and ICR don’t need to take any action. And in fact, it may be a good idea for many enrollees to stay in these plans for now, particularly if a borrower’s income has increased since their last income recertification. But these individuals should start considering their alternative repayment options now. And many should prepare for potentially higher payments under IBR or RAP.
Student Loan Borrowers With Parent PLUS Loans
Some student loan borrowers who have Parent PLUS loans may also want to consider changing repayment plans. Under the Big, Beautiful Bill, Parent PLUS borrowers will be cut off from student loan forgiveness and income-driven repayment unless they consolidate their loans by July 1, 2026, and enroll in an income-driven repayment plan by July 1, 2028. Currently, the only income-driven repayment plan for most consolidated Parent PLUS loans is the ICR plan. Once that plan has been phased out, borrowers enrolled in ICR or one of the other income-driven options will be able to switch to the IBR plan. All other Parent PLUS borrowers would have no option to repay their student loans based on their income going forward.