Student Loan Borrowers Face Transition to New Repayment Plans

Over 643,000 federal student loan borrowers are currently awaiting debt forgiveness or enrollment in affordable repayment plans, as reported by the U.S. Department of Education. As of March 2026, 553,966 requests for income-driven repayment (IDR) plans remain pending, alongside 89,720 applications for the Public Service Loan Forgiveness (PSLF) buyback option. The PSLF program, established in 2007, offers debt cancellation to nonprofit and government workers after ten years of qualifying payments. The Biden administration's buyback option allows borrowers to retroactively pay for missed months due to forbearance or deferment, expediting their path to forgiveness.

CNBCWRAL

Starting in July 2026, borrowers will have a limited timeframe of 90 days to select a new repayment plan as the Saving on a Valuable Education (SAVE) Plan is set to end. This plan, which provided more lenient terms, will be replaced by the new Tiered Standard Plan and the Standard Repayment Plan. Under Secretary of Education Nicholas Kent emphasized that borrowers are expected to repay their loans, stating, “if you take out a loan, you must pay it back.” Those who do not transition within the specified period will be automatically enrolled in one of the new plans, which may not offer forgiveness options.

WRALCNBC

The new repayment plan, referred to as the Repayment Assistance Plan (RAP), will require payments of either $10 or 1%-10% of adjusted gross income (AGI) over a 30-year term. In contrast, the SAVE Plan allowed payments to be as low as 5% of discretionary income. The transition from SAVE to RAP is expected to increase monthly payments for many borrowers, raising concerns about their ability to afford these new obligations. Critics, including lending expert Kate Wood, warn that borrowers who have been in forbearance under the SAVE plan may find themselves at a disadvantage, as those months do not count toward forgiveness.

WRALCNBC

The Education Department has indicated that borrowers can achieve forgiveness after 20-25 years of qualifying payments, depending on their repayment plan. However, the new RAP plan extends the forgiveness timeline to 30 years. For those pursuing PSLF, borrowers must work full-time for a qualified employer and make 120 qualifying payments. The Education Department has noted that over 1,800 institutions have nonpayment rates exceeding 25%, highlighting the challenges many borrowers face in meeting their repayment obligations.

WRALCNBC

Many borrowers express anxiety about the upcoming changes, fearing they may struggle to afford higher payments under the new plans. Wood advises borrowers to proactively transition to a new repayment plan before the 90-day deadline and to utilize loan simulators to understand their payment options better. Keeping contact information updated is also crucial, as borrowers must ensure they receive timely notifications regarding their repayment plans.

WRAL

• “[The SAVE] plan protected borrowers’ income significantly more generously than any of the other income-driven repayment plans,” — Kate Wood, Lending Expert at NerdWallet

WRAL

• “This can be a really scary, really uncertain time, but what you want to avoid doing is just waiting,” — Kate Wood, Lending Expert at NerdWallet

WRAL

As the deadline approaches, borrowers are urged to remain informed and proactive in navigating the complexities of their student loan repayment options.

CNBC