student loan repayment changes: Will your student loan plan be removed after July 1? SAVE repayment plan ends as new student loan rules begin in 2026
The SAVE repayment plan has already been removed and is no longer available. People currently on SAVE will start receiving notifications starting July 1, 2026, according to Yahoo Finance. They will get 90 days to choose a new repayment plan. If they do not choose, they will automatically be transferred to another plan. Existing repayment plans will continue for people who took out loans before July 1, 2026.
Current plans still exist
These include standard, graduated and extended repayment plans with fixed or increasing payments. Income-based plans such as IBR, ICR and PAYE are also still available for now. Payments in these plans are income-based and can last 20 to 25 years, with possible loan forgiveness. However, as stated by Yahoo Finance, ICR and PAYE plans will be removed from July 1, 2028.
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New rules from July 2026
The government will provide guidance to borrowers on switching to new plans before they are abolished. If you get even one new federal loan after July 1, 2026, you must comply with the new system. This rule will apply to all your loans, not just your new loan. After July 2026, only two main repayment options will be available for new borrowers. One of these is the Repayment Assistance Plan (RAP), which is income-based.
In RAP, you pay 1% to 10% of your monthly income, with at least $10 as a minimum payment, as noted by Yahoo Finance. You can reduce your payment by $50 for each dependent. The remaining loan balance can be forgiven after 30 years. If your payment does not cover the interest, the extra interest will be cancelled. This means your total loan amount will not increase if you continue to pay on time.
Tiered plan and special loans
The second option is the Tiered Standard Plan with fixed payments based on the loan amount. The repayment period varies between 10 and 25 years, depending on the amount of your debt. As Yahoo Finance notes, the monthly payment on this plan must be at least $50. Only people with old loans (before July 2026) can continue using existing plans. However, they will not be able to access the new Tiered Standard Plan.
Private student loans are different and often offer less flexible options. With private loans, you generally cannot change your repayment plan later. Common private loan options include fixed payments, interest-only payments, or no payments during employment. If you delay payments, interest continues to increase and the total cost increases.
Interest on student loans generally begins to increase from the moment the loan is issued. The important thing is that some repayment plans are ending and new, stricter rules are coming. Your loan timing (before or after July 1, 2026) will determine which plans you can use. As Yahoo Finance notes, borrowers, especially those on SAVE, need to act quickly after July 1 to avoid automatic changes.
FAQ
Q1. Has the SAVE student loan scheme been abolished?
Yes, the SAVE repayment plan has been eliminated and borrowers must choose a new plan after July 1, 2026.
Q2. What changes will occur in student loans after July 1, 2026?
New rules under the One Big Beautiful Bill Act will essentially limit repayment options to RAP and a phased plan for new borrowers.
