Education Department Ends 'Illegal' Student Loan Repayment Plan

Over 7 million borrowers must now choose new options as SAVE plan is struck down

Mar. 28, 2026 at 3:39am

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The U.S. Department of Education is notifying over 7 million student loan borrowers that the SAVE repayment plan they have been enrolled in since 2024 has been deemed 'illegal' by a federal court. Borrowers will now have 90 days to select a new repayment plan, with most facing higher monthly payments.

Why it matters

The SAVE plan provided more lenient terms for low-income borrowers, reducing payments to as little as 5% of discretionary income and offering forgiveness. Its termination leaves millions struggling to afford higher payments and longer repayment periods.

The details

The Education Department said the SAVE plan was based on 'the false promise of student loan forgiveness and artificially low monthly payments.' Borrowers will now have to choose between higher monthly costs or longer repayment timelines under the new Repayment Assistance Plan. This change comes after a federal court struck down the SAVE plan earlier this month.

  • In July 2024, borrowers enrolled in the SAVE plan were placed in forbearance as legal challenges played out.
  • On July 1, 2026, loan servicers will begin issuing 90-day notices to SAVE plan enrollees to select a new repayment option.

The players

U.S. Department of Education

The federal agency responsible for overseeing student loan programs and policies.

Alexis Arredondo

A University of California, Los Angeles graduate who struggled to find full-time work after college and enrolled in the SAVE plan, which is now being terminated.

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What they’re saying

“Today's guidance, which every borrower enrolled in the defunct SAVE Plan will receive over the next week, puts the Biden Administration's illegal student loan bailout agenda to rest once and for all.”

— Nicholas Kent, Under Secretary of Education

“It's very difficult knowing where I'm going to be to able to get this money from.”

— Alexis Arredondo

What’s next

Borrowers will be contacted by their loan servicers in stages over the next two weeks, with those enrolled in the SAVE plan the longest receiving notices first. They will have 90 days to select a new repayment plan, with the new Repayment Assistance Plan as an option.

The takeaway

The termination of the SAVE repayment plan leaves millions of student loan borrowers facing higher monthly payments or longer repayment periods, underscoring the ongoing challenges and uncertainty in the student debt crisis.