The SAVE student loan repayment plan is ending. On December 9, 2025, the Department of Education announced a settlement agreement with Missouri that terminates the program, affecting over 7 million borrowers who will need to switch to different repayment plans within months.
But here's what most borrowers don't realize: interest has been accumulating on SAVE loans since August 1, 2025, and the months spent in SAVE forbearance don't count toward loan forgiveness programs. The longer you wait to switch plans, the more you'll pay.
I'm writing this guide because I've spent the last six months helping clients at my credit repair company navigate this exact situation. The confusion and financial stress I've witnessed is real. Maria, a 34-year-old teacher with $87,000 in student loans, broke down crying in my office when she learned her $0 monthly payment was ending and she'd owe $420 per month under a standard plan. She thought she had until 2028 to prepare.
Here's what you need to know about the SAVE plan ending:
- The SAVE plan allowed 4.6 million of the program's more than 7 million enrollees to lower their monthly bills to $0 per month
- In February 2025, the U.S. Court of Appeals for the Eighth Circuit enjoined implementation of the entire SAVE Plan
- Borrowers currently enrolled in SAVE do not have to wait to switch plans, you should start now
- Many clients have taken steps to move out of the SAVE forbearance but are waiting months for their income-driven repayment plan applications to be processed
- You have multiple repayment options, but choosing the wrong one could cost you hundreds per month
Let me share what I've learned helping dozens of clients through this transition, and what you need to do right now.
What Actually Happened to the SAVE Plan
The SAVE (Saving on a Valuable Education) plan was introduced in 2023 as the most affordable federal student loan repayment option. It calculated payments based on your income and family size, with monthly payments as low as $0 for low-income borrowers.
What made SAVE different:
- Lower income threshold before payments kicked in
- Faster path to loan forgiveness (10 years for small balances under $12,000)
- Interest didn't grow if your payment didn't cover it
- Payments based on 5% of discretionary income (versus 10% in older plans)
In April 2024, Missouri's then-Attorney General Andrew Bailey filed a lawsuit along with the Attorneys General from Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma that challenged the illegal SAVE regulations. Republican-led states argued the Biden administration overstepped its authority and lacked congressional authorization.
The courts agreed. In July 2024, the U.S. District Court for the Eastern District of Missouri enjoined parts of the illegal SAVE Plan. SAVE borrowers were placed into administrative forbearance, meaning no required payments and initially no interest accumulation.
But that protection ended. In August, Trump officials resumed charging interest for borrowers who stayed in that payment pause.
Now, with the December 2025 settlement, the Department of Education committed to:
- Stop enrolling new borrowers in SAVE
- Deny all pending SAVE applications
- Move all current SAVE borrowers to different repayment plans
The timeline is accelerating. Originally, President Trump's One Big Beautiful Bill had set the student loan repayment plan's expiration date as July 1, 2028. The new settlement moves that up significantly, likely to early 2026.
Real Stories From My Credit Repair Clients
Let me share what I've seen firsthand with clients navigating this crisis. These stories illustrate why switching plans now matters so much.
Client Story 1: The $0 Payment That Turned Into $420
Maria, the teacher I mentioned earlier, came to me in October 2025 panicking about credit card debt. During our consultation, I asked about her student loans. She said she wasn't worried, she had a $0 payment under SAVE and thought that was permanent.
Her situation:
- Student loan balance: $87,000
- Income: $52,000 per year teaching elementary school
- SAVE payment: $0 per month
- Standard plan payment if forced to switch: $909 per month
Maria couldn't afford $909. Not even close. She was already struggling with $8,000 in credit card debt from helping her mother with medical bills.
We immediately applied for the Income-Based Repayment (IBR) plan. Her new payment under IBR: $420 per month. Still a shock to her budget, but manageable with some adjustments. We had to cut her credit card payments to minimums temporarily, redirect that money to student loans, and create a plan to tackle the credit card debt once she adjusted.
The lesson: Maria waited too long. If she'd switched in July when forbearance started, she'd have already adapted her budget. Instead, she's scrambling now while application backlogs grow.
Client Story 2: The Application Backlog Nightmare
James, a 29-year-old social worker with $112,000 in student loans, was smarter. He applied for the Pay As You Earn (PAYE) plan in August 2025 when he heard about interest restarting.
Five months later, his application still isn't processed.
His loan servicer confirmed they received it. They confirmed it's "in review." But hundreds of thousands of borrowers have found themselves stuck in SAVE amid a backlog of requests for new repayment plans. Meanwhile, interest keeps accumulating on his $112,000 balance at 6.8%, that's about $635 per month in interest alone.
James is losing sleep. He knows once his application processes, he'll owe back payments for the months he was "in review." His PAYE payment will be about $520/month, which he can afford. But if the backlog takes another three months, he might owe $1,560 in back payments all at once.
The lesson: Even borrowers who act quickly face system delays. James did everything right and still got caught in administrative chaos. His stress illustrates why having an emergency fund matters, he might need to cover back payments in one lump sum.
Client Story 3: The Public Service Worker Losing Forgiveness Progress
Marcus, a 36-year-old public defender, has worked for the government for 8 years. He's been making payments toward Public Service Loan Forgiveness (PSLF), you need 120 qualifying payments (10 years) working for government or nonprofit to get your loans forgiven.
When Marcus entered SAVE forbearance in July 2024, he thought he was protected. He had 94 qualifying PSLF payments already. Just 26 more to go.
But here's the problem: Months spent in the SAVE forbearance do not count towards IDR or Public Service Loan Forgiveness (PSLF), meaning borrowers are missing out on making progress toward becoming debt-free.
Marcus has been in forbearance for 17 months now (July 2024 to December 2025). Those 17 months don't count toward PSLF. He's still at 94 qualifying payments. He lost over a year of progress.
His situation:
- Student loan balance: $145,000
- Qualifying PSLF payments made: 94
- Months lost in forbearance: 17
- New IBR payment: $387 per month
Marcus is furious. If he'd known the forbearance wouldn't count, he would have switched plans immediately. Now he needs 26 more months of payments instead of just 9 more months.
The lesson: PSLF borrowers especially cannot afford to wait. Every month in forbearance delays your forgiveness by one month. Marcus could have been loan-free by late 2026. Now he won't be debt-free until mid-2028.
Your Repayment Options After SAVE
You need to choose a new plan. Here are your options and what they actually cost.
Income-Driven Repayment Plans (IDR)
These calculate payments based on your income and family size. Multiple versions exist:
Income-Based Repayment (IBR):
- Payment: 10-15% of discretionary income
- Forgiveness: After 20-25 years of payments
- Best for: Borrowers with moderate income relative to debt
Pay As You Earn (PAYE):
- Payment: 10% of discretionary income
- Forgiveness: After 20 years
- Best for: Borrowers who took out loans after October 2007
Revised Pay As You Earn (REPAYE):
- Payment: 10% of discretionary income
- Forgiveness: After 20-25 years
- Best for: Any borrower (no loan date restrictions)
Income-Contingent Repayment (ICR):
- Payment: 20% of discretionary income or fixed payment over 12 years (whichever is less)
- Forgiveness: After 25 years
- Best for: Parent PLUS loan borrowers (often their only IDR option)
Real-world example:
Income: $60,000/year Family size: Single Loan balance: $80,000
- IBR payment: Approximately $387/month
- PAYE payment: Approximately $387/month
- REPAYE payment: Approximately $387/month
- ICR payment: Approximately $640/month
Standard Repayment Plan
Fixed payment over 10 years based on your total loan balance, regardless of income.
Standard plan example:
Loan balance: $80,000 Interest rate: 6.5% Monthly payment: $909 Total paid over 10 years: $109,080
This is the highest monthly payment but the lowest total cost, you pay less interest because you're done in 10 years.
Best for: Borrowers who can afford higher payments and want to minimize total interest paid.
Extended Repayment Plan
Fixed or graduated payments over 25 years. Requires at least $30,000 in Direct Loans.
Extended plan example:
Loan balance: $80,000 Interest rate: 6.5% Monthly payment (fixed): $542 Total paid over 25 years: $162,600
Lower monthly payment than standard, but you pay $53,520 more in total interest.
Best for: Borrowers who need lower payments but don't qualify for income-driven plans or make too much for IBR/PAYE to help.
Graduated Repayment Plan
Payments start low and increase every two years over 10 years.
Graduated plan example:
Loan balance: $80,000 Interest rate: 6.5% Initial payment: $486/month (years 1-2) Final payment: $1,356/month (years 9-10) Total paid over 10 years: $113,425
Best for: Borrowers early in careers who expect income to increase significantly.
How to Choose Your New Plan
Here's my step-by-step process I use with every client.
Step 1: Use the Federal Student Aid Loan Simulator
Go to StudentAid.gov and use the Loan Simulator tool. Enter:
- Your current loan balance
- Your adjusted gross income (from your tax return)
- Your family size
- Your filing status
The simulator shows estimated payments under each plan. This takes 10 minutes and gives you concrete numbers to work with.
Step 2: Consider Your Career Path
If you work for government or nonprofit:
- Choose an IDR plan (IBR, PAYE, or REPAYE)
- Apply for Public Service Loan Forgiveness
- Make your 120 qualifying payments
- Remaining balance gets forgiven tax-free
If you work in private sector with growing income:
- Consider graduated or standard plan
- Pay off loans faster, save on interest
- Don't rely on forgiveness that might not come
If you work in private sector with stable/modest income:
- Choose an IDR plan
- Keep payments manageable
- Build emergency fund alongside loan payments
Step 3: Calculate Real Affordability
Don't just look at what each plan requires. Look at what you can actually afford in your budget.
Your student loan payment should not exceed 15% of your take-home pay.
Example:
- Gross monthly income: $5,000
- Take-home after taxes: $3,750
- Maximum for student loans: $563 (15% of take-home)
- Also need to pay: Rent, utilities, food, car, insurance, credit cards
If IBR shows a $387 payment and that's 10% of your take-home, you're probably fine. If it shows $650 and that's 17% of take-home, you might struggle, consider extended or graduated plans.
Step 4: Account for Other Debt
Student loans don't exist in isolation. I see this mistake constantly with clients.
Total all monthly debt payments:
- Student loans: $___
- Credit cards: $___
- Auto loan: $___
- Personal loan: $___
- Medical debt: $___
Total monthly debt should not exceed 40% of gross income.
Example:
- Gross monthly income: $5,000
- Maximum total debt: $2,000 (40%)
- Current non-student debt: $800
- Room for student loan payment: $1,200
If your IBR payment is $387, you're fine. If standard plan requires $909 and pushes your total over $2,000, you need an income-driven plan.
Step 5: Factor in Your Emergency Fund
Do you have 3-6 months of expenses saved? If not, choosing a lower payment plan lets you build emergency savings faster.
Marcus's mistake: He chose the plan with the highest payment because it minimized interest costs. But he had no emergency fund. When his car needed $1,800 in repairs, he put it on a credit card at 24% interest, far worse than his 6.5% student loan rate.
Better strategy: Choose a payment you can afford while saving $200-300/month for emergencies. Once you have $5,000-10,000 saved, you can increase student loan payments.
Step 6: Apply Immediately
Many clients have taken steps to move out of the SAVE forbearance but are waiting months for their income-driven repayment plan applications to be processed. The earlier you apply, the sooner you get out of the processing queue.
How to apply:
- Go to StudentAid.gov
- Log in to your account
- Click "Apply for Income-Driven Repayment Plan"
- Complete the application (15-20 minutes)
- Upload required documents (tax return, pay stubs)
- Submit
Then monitor your email and your loan servicer account daily for updates.
What to Do Right Now
Based on my experience helping dozens of clients through this transition, here's your immediate action plan.
Action 1: Check Your Current Status
Log into StudentAid.gov and verify:
- Are you currently in SAVE forbearance? (Most likely yes)
- What's your current loan balance?
- How much interest has accumulated since August 2025?
- Have you applied for a new plan already?
If you haven't applied yet: Do it today. Seriously, today. Application backlogs are 3-5 months now and growing.
If you applied months ago with no response: Call your loan servicer. Ask for a status update. Ask if any documents are missing. Get a reference number for your call.
Action 2: Run the Numbers
Use the Loan Simulator to see payments under each plan. Write them down:
- IBR payment: $___
- PAYE payment: $___
- REPAYE payment: $___
- ICR payment: $___
- Standard payment: $___
- Extended payment: $___
Pick your top two options based on affordability.
Action 3: Adjust Your Budget Now
Don't wait until payments restart. Adjust your budget this month to accommodate your new payment.
If your new payment will be $350/month:
- Where will that $350 come from?
- What expenses can you cut?
- Can you increase income (side gig, overtime)?
Start "practicing" the payment: Move $350 into a savings account each month now. When your official payment starts, you'll already be adjusted and you'll have a small emergency fund built up.
Action 4: Gather Required Documents
IDR plan applications require documentation:
- Most recent tax return
- Recent pay stubs (last 2-3 months)
- Spouse's income if married filing jointly
- Proof of family size (for some servicers)
Get these ready before you apply. It speeds processing.
Action 5: Contact Your Loan Servicer
Call them directly and ask:
- "What repayment plan do you recommend for my situation?"
- "How long are IDR applications taking to process?"
- "Can I start making payments now to avoid back payments later?"
- "Will I owe back payments once my application processes?"
Get names, dates, and reference numbers for everything.
Action 6: Consider Temporary Forbearance or Deferment
If you absolutely cannot afford payments right now, you have temporary options:
Unemployment deferment: If you're unemployed and looking for work, you can defer payments. Interest still accumulates on unsubsidized loans, but you won't miss payments or go into default.
Economic hardship deferment: If you receive certain federal or state assistance, volunteer in Peace Corps, or face specific financial hardships, you may qualify.
General forbearance: Loan servicers can grant forbearance if you face temporary financial difficulty. This is discretionary, they don't have to approve it. Interest accumulates on all loans.
Important: These are Band-Aids, not solutions. Use them only if you need a few months to stabilize your situation. Don't use forbearance as a long-term strategy.
Action 7: Plan for the Worst Case
What if your application takes 6 months to process and you owe back payments?
Worst case calculation:
New monthly payment: $387 Months in limbo: 6 Total back payment owed: $2,322
Could you pay $2,322 in one lump sum? If not:
- Start saving now toward that possibility
- Ask your servicer if they'll accept payment plans for back payments
- Consider temporary forbearance to reduce the back payment months
- Explore hardship assistance if you truly can't pay
The Bottom Line on SAVE Plan Ending
The SAVE plan gave millions of borrowers breathing room with low payments, often $0 per month. That's ending. Within months, you'll need a new repayment plan and payments will resume.
I've watched clients handle this well and handle it poorly. The difference comes down to timing and preparation.
The clients who are okay:
- Switched plans in summer 2024 when trouble started
- Adjusted budgets early
- Payments have already started
- They're stressed but managing
The clients who are struggling:
- Waited for more information
- Hoped SAVE would survive legal challenges
- Now face application backlogs and financial chaos
- Fighting to avoid default
Your action plan:
- Apply for a new repayment plan today, not next week, today
- Use the Loan Simulator to pick the most affordable option
- Adjust your budget now to accommodate the new payment
- Build or rebuild your emergency fund
- Monitor your application status weekly
- Contact your servicer with questions immediately
The 7+ million borrowers in SAVE are all competing for the same limited processing capacity at loan servicers. The earlier you act, the better your chances of smooth transition.
Start by logging into StudentAid.gov right now. Check your status. Run the numbers. Apply for your new plan. You have a narrow window to avoid the worst of this chaos, but only if you act immediately.