Yes, the federal SAVE (Saving on a Valuable Education) student loan repayment plan is ending due to a proposed settlement agreement with Republican-led states, meaning new borrowers can't enroll, pending applications are denied, and existing enrollees (around 7 million) will be moved to other plans, ending the program sooner than the July 2028 date set by law. Borrowers currently in SAVE should use the Federal Student Aid Loan Simulator to explore other options like IBR or the new RAP plan, as interest started accruing again in August 2025, and the forbearance period is ending, requiring action to avoid financial harm.
Recent updates indicate the federal government plans to end the SAVE (Saving on a Valuable Education) student loan plan, stopping new enrollments and moving current borrowers to other plans, pending court approval of a settlement; borrowers should use the Federal Student Aid Loan Simulator tool to explore alternatives like Income-Based Repayment (IBR) or Income-Contingent Repayment (ICR), as updates for moving borrowers and new PSLF rules are coming. While awaiting changes, continue annual income recertification to keep payments accurate, especially if your finances change.
What SAVE Plan Settlement Means For Student Loans. Under the terms of the settlement agreement, which is pending court approval, borrowers with student loans in the SAVE plan will not be able to remain in a forbearance until the program is sunsetted in 2028 under legislation passed by Congress last summer.
What Happens Going Forward. Without SAVE, several IDR plans remain available: PAYE (Pay As You Earn): Payments are generally 10% of discretionary income and forgiveness may occur after 20 years. IBR (Income-Based Repayment): Payments range from 10% to 15% of discretionary income, depending on when you borrowed.
In February 2025, a circuit court ruled the SAVE plan was unlawful, according to the Education Department. As the legal battle played out, SAVE borrowers were put in forbearance in July 2024, meaning that their loans were temporarily placed on hold and interest stopped accruing.
After July 2028, SAVE, ICR, and PAYE will be phased out, and you'll need to choose a different repayment plan. Your only income-driven options will be IBR or RAP.
You may switch to one of the other income-driven repayment plans: Pay as You Earn (PAYE), Income-Contingent Repayment (ICR) or Income-Based Repayment (IBR). This would allow you to restart payments and earn PSLF and IDR forgiveness credit again. Forgiveness under other IDR plans remains temporarily suspended.
While most borrowers won't need to recertify until 2026, make it easy on future you by enabling auto recertification now. Log in to StudentAid.gov and follow the steps below to prepare.
The "7-year rule" for student loans generally refers to when negative marks, like defaults, are removed from your credit report (around 7 years after the first missed payment or default date for federal loans, 7.5 years for private loans), but the debt itself doesn't disappear and must be paid off; it's also a benchmark in bankruptcy proceedings where federal loans can become dischargeable after 7 years from when payments were due, though proving "undue hardship" is required and difficult.
Staying in SAVE means your loans will eventually have to transition into another repayment plan. Switching earlier places your loans into an active plan that can continue processing payments and forgiveness credit, rather than remaining idle until a required change occurs.
On March 7, 2025, President Trump signed Executive Order 14235, Restoring Public Service Loan Forgiveness, directing the Secretary of Education to propose revisions to the PSLF program and ensure the definition of “public service” excludes organizations that engage in activities that have a substantial illegal purpose.
Cancellation & Forgiveness Options
Can private student loans take your house? Until you default on private student loans, your house is safe. Private lenders must sue the borrower and get a judgment before putting a lien on a home or taking money from a bank account.
You cannot be jailed or arrested for failing to pay student loans. Default is a civil issue, not a criminal one. But missing payments still brings serious financial consequences, which vary depending on whether you have federal or private loans.
U.S. Department of Education Announces Agreement with Missouri to End Biden Administration's Illegal SAVE Plan | U.S. Department of Education.
The Department of Education's Plan for SAVE
The settlement would end SAVE, and borrowers currently enrolled in the plan would be moved to different repayment plans. If the court approves the proposal, borrowers will have a limited amount of time to select a new plan.
Apply for another available IDR plan
If you can't afford your current payments and haven't yet applied for the SAVE Plan, consider applying for the next lowest-payment IDR Plan available to you.