Federal student loan borrowers across the country are navigating a major shift in repayment rules following the end of the Biden-era SAVE program, even as default rates continue to climb nationwide.
Data from the Office of Federal Student Aid show that roughly one in five federal student loan borrowers is now in default, representing more than $233 billion in delinquent debt. The SAVE repayment plan officially expired July 1, and borrowers who were enrolled in it are being urged to act quickly to avoid financial penalties.
Under the current federal system, borrowers have two primary options: an income-based repayment plan or an income-contingent repayment plan. The income-contingent option can lead to loan forgiveness after 20 to 25 years of qualifying payments, though that program itself is scheduled to phase out in 2028.
Financial counselors say many borrowers are struggling to resume payments after years of pandemic-era pauses and temporary relief.
“Everything was on hold for five years, so then when all of the payments started coming, they weren’t prepared to make those three, four, five hundred dollar payments, so it definitely became a hardship,” said Jackie Duran, president of the U.S. Student Loan Center in Tampa.
Borrowers previously enrolled in SAVE now have 90 days to select a new repayment plan. Federal officials say the updated system is designed to simplify choices, but counselors say confusion remains widespread over which programs borrowers qualify for.
“Find out who has your loan. Get professional help if you need it,” Duran said. “Get answers fast. Don’t wait, because the sooner you do it, the more options you have.”
Falling behind on payments can have lasting consequences, including wage garnishment, federal tax refund offsets, and damage to credit scores, making it harder to qualify for future loans or credit.
Some lawmakers are pushing for legislative changes to ease the burden. Rep. Anna Paulina Luna is co-leading a bill to reduce federal student loan interest rates to 2%, which supporters say would significantly reduce the total amount borrowers repay over time.
“People who are taking out that debt essentially are being basically forced into what I would consider a lifetime of payment,” Luna said. “It’s obviously not zeroing out someone’s debt, but it is providing a realistic pathway for them being able to pay it back.”
Several similar proposals have been introduced in Congress with what supporters describe as bipartisan interest, though comparable efforts have failed to become law for more than a decade.
Borrowers already in repayment are encouraged to contact their loan servicer immediately to review options and enroll in a new plan before the 90-day transition window closes. Additional guidance is available through the U.S. Student Loan Center at usstudentloancenter.org.
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