Student Loan Borrowers Are Leaving SAVE Plan for More Certain Repayment Options

Tammy Stinson was one payment away from earning time-based student loan forgiveness when her repayment plan was paused due to ongoing lawsuits.

Former President Joe Biden said he created the Saving for a Valuable Education (SAVE) repayment plan to provide an easier and more affordable income-driven repayment (IDR) option. However, the resulting legal challenges and policy changes have caused issues for the 8 million borrowers like Stinson who enrolled in the plan at its peak.

The 55-year-old from Iowa was one of the borrowers automatically enrolled in the SAVE program when the Biden administration established the more generous repayment plan in 2023. However, in June 2024, a court placed an injunction on the plan, preventing the Department of Education (DOE) from implementing it. Like millions of other borrowers, Stinson was placed in forbearance.

While in forbearance, she could not make qualifying payments toward loan forgiveness. So, she decided to apply to switch from SAVE to another income-driven repayment plan called Income-Based Repayment.

“During 2025, they still have it where you don’t have to pay taxes on what’s forgiven, but that changes in 2026,” Stinson said. “So that’s why I’ve been trying so hard to get [my forgiveness] through.”

Thousands of Borrowers Leave the SAVE Plan

Those who remain in the SAVE plan are still not required to make payments, and their loans are not accruing interest as part of the forbearance, but they are also not making progress toward forgiveness. They also don’t know when that might change or what payments would look like when they resume.

Because of how the court cases against SAVE have progressed, the government would have to create a plan to transition those already enrolled in the repayment plan to some kind of alternative, experts say.

That lack of clarity on what is next for borrowers in the SAVE plan is causing some to leave. Over the six months ending March 31, an estimated 160,000 borrowers dropped out of the SAVE plan, according to the Education Department.

While that’s only 2% of the borrowers enrolled in the SAVE plan at its peak, it was the program’s first two quarterly declines since its inception.

A federal court also questioned the legality of other income-driven plans during the lawsuits against SAVE. The only plan under that umbrella that was not contested was the Income-Based Repayment (IBR) plan. It was also the only income-driven plan to add borrowers in the most recent quarter.

Scott Buchanan, the executive director of the industry group Student Loan Servicing Alliance, said loan servicers have seen many SAVE borrowers move to IBR plans as they start to realize their repayment plan is essentially shut down.

“I don’t think anyone who knows much about this stuff sees any path forward for the SAVE plan,” Buchanan said. “I think a lot of borrowers are saying… ‘I’m not making progress. I’m not paying down my loan, and I’m going to have to at some point, right? Also, I’m not getting credit for forgiveness programs.'”

Leaving Is Only the First Step to Clarity

Stinson started her application to move from SAVE in January, and on April 30, her loan was approved to move to IBR.

Loan servicers have had trouble keeping up with rapidly changing policies. For example, in June, the DOE closed applications for all IDR plans and paused processing. Just a month later, however, applications were back up after a lawsuit regarding the closure was filed against the DOE.

“It’s always more challenging when everything’s in flux for us to be able to make sure that we’re giving people the right options that are available,” Buchanan said. “Especially when court injunctions come out, and things that were options a year ago are no longer an option today.”

Stinson said that when she calls servicers and Federal Student Aid, she gets differing forgiveness dates and the amount of qualifying payments she has made.

“It’s hard when you call, but you never get the same answer,” Stinson said. “So, I don’t know what’s going to happen for me, but I keep hoping.”