In the wake of recent changes and election results, student loan borrowers have more questions than ever. I have had so many people reach out, wondering what’s happening with repayment plans and what you should do next. Here’s what I know (and what I can guess) as we navigate these uncertain times together.
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Where Are We Now?
Right now, the SAVE repayment plan is at risk. It could soon be blocked or taken away altogether. If that happens, the only repayment plan currently left for most borrowers (excluding those with Parent PLUS loans) is the Income-Based Repayment (IBR) plan.
Let’s break down IBR:
If you started borrowing before July 1, 2014, your payment is based on 15% of your discretionary income with a 1.5x multiplier on the federal poverty line for your family size (which is lower than the 2.25x multiplier under SAVE).
If you started borrowing after July 1, 2014, your payment will be calculated using 10% of your discretionary income and that same 1.5x multiplier on the federal poverty line for your family size.
IBR Plan Rules
What About Public Service Loan Forgiveness (PSLF)? For those who already have student loans, PSLF should be safe. It’s included in the promissory note (the contract you signed when taking out the loans). However, there’s a chance it may not be available for new borrowers in the future, so keep an eye on developments.
If the SAVE plan gets blocked, we may see older repayment plans like PAYE (Pay As You Earn) and REPAYE (Revised Pay As You Earn) return.
The PAYE and IBR plans create potential challenges, especially around proving a "partial financial hardship", meaning your payment under these plans must be lower than the standard 10-year repayment plan. For borrowers whose income increases quickly (think of doctors just starting their careers), this can be a major hurdle.
Why SAVE Was So Popular
The SAVE plan had two significant benefits:
You could file taxes separately to exclude your spouse’s income from your repayment calculation.
There was no need to prove partial financial hardship, making it accessible for a wider range of borrowers.
In contrast, REPAYE requires both spouses’ incomes, even if you file taxes separately. This can result in much higher monthly payments for married couples.
What Happens If You’re on SAVE Right Now?
If you’re currently on the SAVE plan, you might be in a tricky spot. While on SAVE, your loans are in a non-interest-bearing forbearance, which sounds great but doesn’t count towards PSLF credits unless you use a special loophole: the PSLF Buyback Program.
You can buy back time towards PSLF, but only if you don’t change the status of your current loans. This means that if you want to get this period to count, you cannot consolidate your current loans.
You also need at least 120 months of eligible public service work.
This program can be a lifesaver if you’ve reached 120 months of qualifying payments during the forbearance period and aren’t allowed to make payments right now.
However, this program isn’t guaranteed. It’s not written into law, so there’s a big risk it could disappear with the new administration.
What Should You Do Right Now?
If you’re on SAVE and your income is low, it might be time to consider switching to the IBR plan. I’ve been hearing that loan servicers are taking 3-4 months to process Income-Driven Repayment (IDR) applications. It’s possible they’re intentionally dragging their feet during this transition period.
For most people, though, my advice is to wait and see. I know patience can be tough, but there are too many unknowns at the moment. Big changes are likely coming over the next few months, which will impact any advice I or other student loan planners can offer.
Key Questions We’re Waiting to Answer:
Will the SAVE plan survive?
Which repayment plans will be available moving forward?
Will there be any changes to the PSLF program?
Will the PSLF Buyback Program continue to be allowed?
Final Thoughts
It’s frustrating to see a repayment plan like SAVE, which was heavily promoted as a great option, suddenly face the chopping block. Many borrowers trusted the current rules and made decisions based on them, only to find themselves in a difficult situation.
I’ll continue to monitor the situation closely and provide updates as we learn more. If you have student loans or know someone who does, subscribing to my newsletter is the best way to stay informed in real-time. This is a complex issue, but I hope to provide as much clarity for you as possible.
David Gourley, CSLP® is the Founder and lead Financial Planner at K-12 Planning, an independent financial planning firm specializing in finance for teachers. He served for eight years as a high school mathematics teacher before transitioning into the financial services industry. He started K-12 Planning in 2024 and his passion for serving as a fiduciary for teachers and a student loan planning expert runs deep, as his wife and several other family members have served as educators for years.
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