SAVE Borrowers Face Higher Student Loan Bills as Exit Deadline Nears

According to CNBC, many federal student loan borrowers could see their monthly payments double or triple in the coming weeks if they do not leave the now-defunct Saving on a Valuable Education, or SAVE, repayment plan. The Trump administration told borrowers earlier this year that they would have about 90 days to move to another program, and for some borrowers that window began July 1, making the earliest deadline Sept. 29. Servicers are sending notices in waves, so many borrowers have more time. More than 6.9 million borrowers were still enrolled in SAVE as of March, with an average debt of about $55,000, according to an analysis by higher education expert Mark Kantrowitz. If borrowers do not choose another repayment plan within 90 days of notification, they will be moved into either the Standard Repayment Plan or the new Tiered Standard Plan, which launched July 1. Kantrowitz said payments for some borrowers could double or triple. The Biden administration-era SAVE plan offered very low monthly payments, but it was overturned by Republican-led legal challenges and legislation. Many enrollees have not made a payment in more than two years while lawsuits played out, and their balances have grown with interest. Borrowers can apply for another income-driven repayment plan through studentaid.gov or their servicer's website, but the Education Department is still working through a backlog of more than 530,000 pending income-driven repayment applications as of the end of April, according to a May court filing. A new income-driven option, the Repayment Assistance Plan, or RAP, launched in July and caps monthly payments at 1% to 10% of earnings, with loan forgiveness after 30 years. An analysis provided to CNBC by student loan advisory platform Summer found that a two-person household earning just over $50,000 with $60,000 in student debt at a 6.8% interest rate would owe $690 a month under the 10-year Standard Repayment Plan, compared with $158 under RAP.