The SAVE Plan Is Dead. Here’s What to Do Next.

A colleague’s daughter called me last month. She’d been on the SAVE plan, hadn’t made a payment in over a year, and assumed everything was fine. “No news is good news, right?”

It wasn’t fine. Her balance had grown by over $1,000 since August. None of those months counted toward forgiveness. And the plan she’d been counting on was officially dead.

If you have federal student loans — or someone in your family does — here’s what just happened and what to do about it.

What Happened

On March 10, 2026, a federal appeals court officially ended the SAVE plan, the most affordable income-driven repayment option ever created. Nearly 8 million borrowers were enrolled at its peak; more than 6.5 million were still in forbearance as of late last year. Most have been sitting in administrative forbearance since mid-2024, meaning no payments required and no action needed.

That sounds like a relief. It’s actually a trap.

Why “Doing Nothing” Is Costing You Money

Here’s what most borrowers don’t realize: your loans started accruing interest again on August 1, 2025. Every month since then, your balance has been growing — and none of those months count toward loan forgiveness.

Let’s make this real. Say you have $35,000 in federal loans at 5.5% interest. That’s roughly $160 per month in interest accruing while you’re in forbearance. From August 2025 through March 2026, that’s about $1,280 added to your balance. By July 2026, when the replacement plan launches, you’ll have added nearly $2,000 to what you owe — with zero progress toward forgiveness.

If you’re pursuing Public Service Loan Forgiveness, every month in this limbo is a month that doesn’t count toward your 120 qualifying payments. Two years of forbearance means two years added to your timeline.

Doing nothing feels safe. It’s the most expensive choice you can make right now.

What to Do This Week

Switch to Income-Based Repayment (IBR). This is the one income-driven plan that survives all the changes coming in 2026 and beyond. Congress eliminated the old “partial financial hardship” requirement last July, and the Department of Education’s systems caught up late last year — so more people now qualify than ever before.

Here’s how to switch: Go to StudentAid.gov/idr and start a new application. When it asks which plan you want, select IBR specifically. Your payments will restart, but every payment counts toward forgiveness. Your prior qualifying months from before the SAVE forbearance carry over.

If you’re close to PSLF forgiveness, there’s an option worth knowing about. The PSLF Buyback program lets you pay for months lost during forbearance — but only if you already have 120 months of qualifying public service employment and buying back those months would complete your required payments. That’s a narrow group, but if it’s you, it’s worth filing. There’s a significant backlog (processing is taking 6 to 12 months), so continue making regular payments while you wait.

If you have Parent PLUS loans, this is urgent. Parent PLUS loans are not eligible for the new Repayment Assistance Plan launching in July. The only income-driven path for Parent PLUS borrowers involves consolidating into a Direct Consolidation Loan first, which then makes you eligible for Income-Contingent Repayment — and from there, potentially IBR.

Here’s the catch: that consolidation must be completed by July 1, 2026. After that date, new Parent PLUS borrowers lose access to income-driven repayment entirely. Consolidation takes four to six weeks to process. If you need this option, don’t wait until June.

What’s Coming Next

The Repayment Assistance Plan (RAP) launches no later than July 1, 2026. It’s simpler than the old alphabet soup of repayment plans, but it’s also less generous. Payments are based on 1–10% of your adjusted gross income, with a $10 minimum. Forgiveness comes after 30 years instead of the 20–25 years under older plans.

If you’re already on IBR and don’t take out any new loans after July 2026, you can stay on IBR. You’re not forced into RAP. But if you borrow again after that date, all your loans — old and new — must go under RAP or the standard plan.

One more thing that flew under the radar: IDR forgiveness is generally taxable again. The temporary federal exemption from the American Rescue Plan expired December 31, 2025. Loan forgiveness through income-driven repayment in 2026 or later will generally count as taxable income at the federal level. Public Service Loan Forgiveness remains tax-free, but if you’re on the 20- or 30-year IDR path, start planning for the potential tax bill.

The One Thing to Do Today

Go to StudentAid.gov/idr and switch to IBR. It takes about 15 minutes. Don’t wait for the government to send you a letter — by the time that arrives, you’ll have lost more months and added more interest.

If this post isn’t for you, forward it to someone it is. Your adult kid. Your niece finishing grad school. The colleague who mentioned their student loans in passing. This is the kind of information that doesn’t reach people until it’s too late.