Student Loan Transition Deadline Has Passed: What Borrowers Should Do Now

A key deadline has now passed for some borrowers who were enrolled in the discontinued Saving on a Valuable Education, or SAVE, repayment plan.

The first group of affected borrowers had to choose a different repayment plan after receiving transition notices. Those who missed the cutoff may be moved automatically into the Standard Repayment Plan or the new Tiered Standard Plan, depending on how their loans are structured. Even so, experts say borrowers still have ways to limit the impact.

“Anyone who missed the deadline needs to act immediately by contacting their loan servicer, applying for an eligible income-driven repayment plan, and requesting a temporary processing forbearance if necessary,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “Failing to move quickly could result in even more issues that could damage their credit scores.”

The deadline did not apply to everyone at once. Because servicers sent transition notices in stages, borrowers have had different due dates even when they use the same servicer.

Why It Matters

Millions of Americans have had to rethink how they repay federal student loans after the SAVE plan ended following a court order. The U.S. Department of Education said it would notify millions of SAVE borrowers and that servicers would begin sending individualized transition notices in phases.

Borrowers who do not select another repayment plan by their deadline are enrolled in a fixed-payment plan. Depending on the loans they hold, that can mean the Standard Repayment Plan or the Tiered Standard Plan. Monthly bills under those plans are often higher than under an income-driven repayment plan, which means missing the deadline can carry significant financial consequences.

What to Know

At first, SAVE borrowers were told they would have at least 90 days after receiving a servicer notice to pick another repayment plan.

For the earliest group, a later final notice effectively added another 30 days, extending their deadline.

“If they fail to act, they will be automatically placed into a Standard or Tiered Standard repayment plan, which could result in significantly higher monthly payments and potentially impact their path toward loan forgiveness,” Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek.

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What to Do if You Missed the Student Loan Deadline

Missing the deadline does not mean borrowers have permanently lost access to an income-driven repayment option.

Borrowers can still apply for an alternative income-driven repayment plan after the deadline has passed. They also will not immediately owe the new Standard-plan amount the day after the deadline, because the Education Department says servicers must provide the new monthly payment amount at least 21 days before the first payment under the new plan is due.

If a borrower has already missed the deadline, the first step is to log in to the loan-servicer account and the StudentAid.gov account, confirm which plan they have been moved into, compare available repayment choices, and submit an application for the plan that best fits their situation.

“The biggest concern is that borrowers who fail to choose another repayment plan could automatically be placed into a standard repayment option with significantly higher monthly payments, potentially creating a heavier financial burden for many already facing numerous other costs affected by ongoing inflationary pressures,” Beene said.

Borrowers waiting for an income-driven repayment application to be processed may also ask their servicer about a processing forbearance, which can delay payments for up to 60 days while the application is reviewed.

Borrowers enrolled in automatic payments should also watch the amount their servicer plans to withdraw. If a payment rises after a move to the Standard or Tiered Standard plan, the automatic withdrawal amount rises as well.

What Repayment Plans Can SAVE Borrowers Choose?

The repayment option available to each borrower depends on factors such as loan type and when the loans were taken out.

Transition guidance from the department points borrowers to other repayment choices, including the new Repayment Assistance Plan, or RAP.

Federal Student Aid recommends using its Repayment Calculator to check eligibility and compare estimated payments before choosing another plan.

More Student Loan Deadlines Are Coming

This deadline was only the first step in a longer transition away from SAVE.

Servicers have been sending notices in waves, so affected borrowers remain on different timelines. Even borrowers with the same servicer may have different deadlines.

“Depending on when you receive your 90-day notice, if you miss the initial window, you will be given a final 30-day notice to respond,” Thompson said. “If you miss that deadline as well, you will be shifted into a fixed repayment structure that could be much more expensive. My advice is to evaluate your options before the deadline rather than allowing the government to make that decision for you.”

Borrowers who have not yet reached their deadline do not need to wait to take action. They may choose another repayment plan before their notice arrives.

What Happens Next

SAVE borrowers should continue to monitor messages from their loan servicer as the transition continues.

Those who have already missed their deadline should confirm whether their loans have been placed into the Standard or Tiered Standard plan and review the new payment amount to see whether another repayment option better matches their income and financial situation.