Before the Deadline: What Every Borrower Must Do Now
Student loan repayment can feel overwhelming, especially as programs change and deadlines approach. Whether you are enrolled in the SAVE Plan, behind on payments, or facing loan default, the most important thing to understand is that inaction will make your situation worse.
There are clear steps you can take today to protect your financial health and regain control of your loans.
For Borrowers Enrolled in the SAVE Plan: Choose a New Plan ASAP
The SAVE Plan is ending and those enrolled in this plan will need to choose a new repayment plan before July 2026 to avoid being automatically placed into the Standard Repayment Plan—which could result in a higher monthly payment for some borrowers.
SAVE Plan borrowers are currently in forbearance, meaning payments are temporarily paused. However, interest continues to accrue during this period, and the longer you wait to select a new plan, the higher your balance will grow.
Take Action Now: Visit the Income-Driven Repayment (IDR) page on the studentaid.gov website to select a new plan. You’ll be asked to switch to one of the following IDR Plans:
1. IBR – Income-Based Repayment
Payment: 10% of discretionary income
Forgiveness: 20–25 years
Best for: Low/moderate income, grad school debt
Payment Cap: Never more than 10-year Standard Plan
- Bonus: Government pays unpaid interest on subsidized loans for first 3 years
2. PAYE – Pay As You Earn
Payment: 10% of discretionary income
Forgiveness: 20 years
Best for: Newer borrowers with lower income
Payment Cap: Never more than 10-year Standard Plan
Note: Unpaid interest accrues
3. ICR – Income-Contingent Repayment
Payment: 20% of discretionary income (or 12-year fixed plan amount)
Forgiveness: 25 years
Best for: Parent PLUS borrowers (after consolidation) or those not eligible for IBR/PAYE
Payment Cap: Can be higher than 10-year Standard Plan
For Borrowers in Delinquency: Address It Immediately
One day after you miss a student loan payment, your loan is considered past due or delinquent. Once your loan payment is 180-269 days past due, you’re considered to be in late-stage delinquency and at serious risk of entering default. Each missed payment damages your credit, increases your total balance through interest and penalties, and limits your eligibility for future aid. Ignoring delinquency will escalate the situation and narrow your options for resolution.
Here’s how to take action:
Contact your loan servicer right away. Explain your circumstances and ask about repayment options. Early communication is critical — servicers can help you avoid default and connect you with the most appropriate programs.
Explore Income-Driven Repayment (IDR) plans. These plans base your monthly payment on your income, sometimes reducing it to as little as $0.
Consider temporary relief. Forbearance or deferment may provide short-term payment suspension if you are facing financial hardship. In forbearance, payments are temporarily paused, and interest continues to accrue. In deferment, payments are also paused, and for certain loans like subsidized federal loans, interest does not accrue.
Taking the initiative to communicate with your servicer now can prevent long-term damage and keep your loans in good standing.
For Borrowers in Default: Understand the Consequences and Options
If you have missed payments for more than 270 days, your loan is considered to be in default. Defaulting on a federal student loan carries serious financial and legal consequences.
Without intervention, the consequences are dire:
Your wages may be garnished, which is when the government takes funds directly from your paycheck to repay your loan.
You could lose your IRS tax refund.
Your credit score will suffer significant damage, affecting your ability to rent or take out car or home loans.
You will lose eligibility for additional federal student aid, and collection fees may be added to your balance.
Two Ways to Get Out of Loan Default:
- Loan Rehabilitation: Contact your loan servicer to start the loan rehabilitation process. Your loan type and who holds your loan will determine what you need to do to rehabilitate your loan.
- Loan Consolidation: Combine your defaulted loans into a new Direct Consolidation Loan and agree to repay it under an income-driven plan.
Both options stop collections activity and restore your eligibility for federal benefits, but prompt action is essential.
The Bottom Line: Time Is the Critical Factor
Whether you are transitioning from the SAVE Plan, catching up on missed payments, or resolving a default, the most important step is to act quickly. Every week of delay leads to additional interest, penalties, and reduced options for relief.
Visit studentaid.gov or contact your loan servicer today to discuss your next steps. With the right plan in place, you can stabilize your finances and move forward with confidence.
Actionable Next Steps
For SAVE borrowers: Select a new repayment plan
For borrowers in delinquency and default: Contact your loan servicer to explore options
Don’t know who your loan servicer is? Find out here
