More than 7 million Americans on the Saving on A Valuable Education student loan repayment plan will face a new monthly bill in the coming months. Many are anxious, angry and worried they won’t be able to pay it.
Borrowers spent two years waiting in limbo until a federal appeals court judge signed the SAVE repayment plan’s obituary in March. That ruling — an approval of a settlement between the state of Missouri and the U.S. Education Department — that they would soon have to switch repayment plans and start paying their loans again.
In many cases, those new payments will be several times as high as the previous ones.
On July 1, student loan servicers will begin sending official notices to borrowers with instructions on how to select a new plan. After a borrower receives the notice, they’ll have 90 days to enroll in a new plan. If they take no action, they’ll automatically be transitioned to a standard 10-year plan.
Launched by the Biden administration in 2023, the SAVE plan was by far the most affordable and flexible repayment option available to borrowers. Regardless of their student loan balance, borrowers were given manageable monthly bills based on their discretionary income, often resulting in required payments below $100 and sometimes as low as $0.
Because of its generous terms, SAVE was immediately met with widespread borrower interest and swift legal opposition from several states. In July 2024, legal challenges plunged the plan into a temporary forbearance, and most borrowers haven’t made any payments since.
The entire situation has unearthed emotions that alarm Betsy Mayotte. As president and founder of The Institute of Student Loan Advisors, she fields thousands of questions from borrowers, offering free advice for how to navigate their specific situations. She says she’s never seen the level of rage, despair and panic she’s witnessing now.
“I’m seeing a lot of anxiety, I’m seeing a lot of fear, and I’m seeing way more threats of self-harm than I’ve ever seen with borrowers,” says Mayotte. “It’s very troubling to me. I’m not seeing anybody talk about that, but I see it every single day.
“They say, ‘I was told that my payment was going to be this, and I arranged the rest of my life around it. Now my payment’s going up by three, four, five times. How was I to know that?'”
U.S. News & World Report spoke with more than a dozen SAVE borrowers to get a glimpse of how the changes will affect their finances and how they’re feeling as they prepare to restart payments. They’re being identified only by their first names so they can discuss sensitive financial matters. Here are some of their stories.
[Read: ]
‘It’s Depressing’: Frugal Biker Faces Spike in Payments
Bryttani would much rather be cruising a two-lane Colorado mountain highway on her Honda Rebel 500 motorcycle than navigating the twists and turns of the SAVE plan.
Unfortunately, about a quarter of her take-home pay will soon be going toward her combination of federal and private student loans, so she’s preparing.
“I live a quite frugal life, but it’s going to have to be even more so,” says the 32-year-old, who makes $77,500 a year as an air pollution scientist for the state of Colorado. “I’m fortunate enough that I live with my best friend, so we split the rent. But there’s not room in the budget for it.”
Bryttani graduated in 2018 with a bachelor’s degree in chemistry and $80,000 in student loans, $45,000 of which are federal. While the SAVE plan set her payment around $70 a month, she says that will rise to $477 a month when she switches to the IBR plan.
We live in the richest country in the world and like three dudes have all of the money. What gives?
With that size of payment, she’s concerned she may default. “Rent and food will always take precedence,” she says.
Bryttani already keeps her expenses low. She cooks nearly all meals at home, and she can perform most maintenance on her car and motorcycle. However, she’s putting off some larger car repairs that she’d have to pay for. International travel, long a dream of hers, feels unlikely to ever happen, she says.
What bothers her, Bryttani says, is that it feels like the country isn’t willing to invest in its people.
“We live in the richest country in the world and like three dudes have all of the money,” she says. “What gives? I am someone that busted their ass, and all I have to show for it is a ball and chain of debt that I will struggle to keep up on for the rest of my life. It’s depressing.”
She says she hopes to hang onto the motorcycle as long as she can.
“If need be in the future I’ll sell it, but I would really like not to,” she says. “The only place I feel free is on my bike.”
‘I Was Four Payments Away’: A Florida Man’s 2-Year Quest to Pay the Government
Josh was nearing the forgiveness finish line two years ago when legal challenges forced the SAVE plan into temporary forbearance.
The 38-year-old public servant had made 116 of the 120 loan payments needed to get his $200,000-plus balance canceled through the Public Service Loan Forgiveness program. With SAVE halted, any new payments he sent in wouldn’t count toward PSLF.
“I was four payments away,” he says. “It is comical. If I don’t laugh about it, I’ll cry about it. I was done.”
Two years and countless phone calls later, he’s still stalled on 116.
A 2013 law school graduate, Josh started his career in private practice, earning around $160,000. But he soon decided he’d prefer a role that serves his community and took a position with the state of Florida that initially paid a $40,000 salary, accepting a six-figure pay cut. His pay has since climbed back up around $100,000, but he says income-driven repayment and 10-year forgiveness made it possible for him to make the move to public service.
It’s like fighting a ghost. You can’t get a hold of anyone. You just kind of sit and go like, ‘All right, I guess I’ll just wait until they tell me what I have to do next.’
He first paid his loans under the Income-Based Repayment plan and then switched to REPAYE. Like other REPAYE borrowers, Josh was automatically transitioned to SAVE when that plan launched in 2023, where his payments hovered around $200 a month.
If he does have to switch to a new plan, he estimates his new monthly bill will be around $1,600. But he shouldn’t have to, he says.
That’s because 18 months ago he sent in a request for something called PSLF buyback, a program that allows you to retroactively make payments for past months to get credit toward forgiveness. He asked to simply make a lump-sum payment to cover the remaining four months and wash his hands of his debt.
His request is still pending. His monthly calls to the Education Department yield no answers, he says. He’s received just one correspondence regarding his buyback application. That was when he filed a second request, fearing his initial one got lost in the system. A response informed him that his duplicate request was being canceled.
“I’ve been sitting in purgatory waiting for what seems to be a pretty simple math calculation,” he says. “I just want to pay them the money. It’s crazy to sit around and wish you could give the government money.”
Armed with an attorney’s wit and a briefcase full of SAVE plan analogies, Josh has tried to find some humor in the bureaucratic headaches he’s endured.
“It’s like fighting a ghost,” he says of his attempts to get an update on his buyback request. “You can’t get a hold of anyone. You just kind of sit and go like, ‘All right, I guess I’ll just wait until they tell me what I have to do next.'”
[Read: ]
Selling Plasma and Renting Her Yard: A Teacher Explores New Income Streams
This would typically be the time when Lauren could take a breath and relax after nine months in a classroom with seventh graders. But the 36-year-old Denver-area social studies teacher is bracing for her monthly loan payments to more than double when she transitions to a new repayment plan.
Lauren went back to school to earn her master’s in education in 2018, which allowed her to move up the school district pay scale but also left her with a current loan balance of about $39,000.
I’m worried. The $400 a month that they’re quoting me is what I have left over for groceries.
Now making around $73,000 a year, she estimates her student loan payments will jump from around $150, when she was last paying under SAVE, to roughly $400. She already pays monthly rent of $2,000 and has two dogs, one of which requires significant vet bills.
“I’m worried,” Lauren says about her ability to make higher monthly payments. “The $400 a month that they’re quoting me is what I have left over for groceries.”
She’s trying to be proactive and prepare for the extra bills.
“I’m already looking at random ways to make money now,” she says. She sells plasma twice a week, and she’s looked into renting out her yard for events. The most promising side job seemed to be tutoring, but she says most potential clients want someone who could continue to tutor through the school year, and she doesn’t believe she could carve out enough time outside of her regular teaching duties.
Lauren says the ending of the SAVE plan has her feeling a mix of “confusion and anger.”
“It just feels really crappy that they’re kind of going back on what was sold to us,” she says.
Disney on Ice: Family Delays Trips as Payments Rise, Tax Bomb Looms
Katherine acknowledges that her financial situation leaves her better positioned to withstand the bump in student loan payments than many others. With an established job in banking compliance that pays around $170,000 and a household income in the high $200,000s, the 37-year-old Tampa, Florida, mother of two isn’t worried about defaulting as she restarts payments.
“We are blessed to be in a situation where we can afford the payment, but it definitely changes our overall financial plans,” she says.
After graduating law school in 2013 with about $120,000 in federal loans, her first job paid just $41,000. A misunderstanding over recertifying her income caused interest to capitalize early during repayment, resulting in a larger principal and higher interest payments. Despite paying over $40,000 toward her loans, her balance has now risen above $200,000, which she calls “disheartening.”
After evaluating her options, Katherine chose to shift her loan balance to the PAYE plan. After payments of between $300 and $500 in SAVE, she’ll now pay a little over $1,500 a month. That figure is similar to what her family also pays on their mortgage and for childcare for each of their kids. Her husband also has student loans, which he is paying off under the standard 10-year plan.
But perhaps a larger concern for Katherine is that could hit when she gets her student loans forgiven in roughly a decade. Federal student loan balances can be forgiven after a borrower has made a certain number of payments in an income-driven repayment plan — typically 20 to 25 years’ worth. It’s a huge relief for many, but the IRS treats that canceled balance as income. For Katherine’s family, an extra $200,000 of taxable income at their tax bracket could result in a one-year tax bill totaling tens of thousands of dollars.
For now, she says her family has been adjusting their spending and cutting back or delaying certain activities, particularly vacations. She’d planned to take her oldest son to Disney World earlier this year but scrapped that trip due to cost. She’d also hoped to take her kids to see their 96-year-old grandmother more often, but “we just can’t swing it.”
“Anything that’s going to be more than a grand for a trip, that’s probably not going to happen,” she says.
[Read: ]
Rent or Student Loans? Californian Fears Homelessness
There’s no question in Nadia’s mind as to whether she would default on her student loans if her monthly payment triples, as estimates show it might when she enrolls in a new plan.
“I know for sure I would,” says the late-20s Californian, who makes between $60,000 and $70,000 as an advisor to politicians across the state.
While her salary would fall around the median range in many areas of the U.S., she says it doesn’t go far in her part of California. In fact, it qualifies her for low-income housing, which she lives in.
I shouldn’t have to worry about eating versus housing versus student loans.
Nadia has about $25,000 in student loans that she took out for undergrad, where she graduated in 2019 with a double major in English and political science. She says her payment on SAVE was between $75 and $100, while her new payments are projected to be at least $300.
She says there isn’t much wiggle room in her budget. She commutes on public transportation and largely limits her spending to necessities. A fan of live music, she’s been turning down friends’ invitations to attend concerts lately to prepare for loan payments. She occasionally skips meals to save money.
“I know this sounds kind of sad, but I feel like I can only eat once a day now because I’m just so worried,” she says. “I shouldn’t have to worry about eating versus housing versus student loans.”
Nadia’s credit score impacts her eligibility for housing. She fears that if she chooses to pay rent over keeping up with student loans, she’ll eventually default and damage her credit score, which in turn could affect housing.
While many SAVE borrowers haven’t made payments in the past two years, Nadia has been paying interest since it began accruing again last August. That has allowed her to maintain roughly the same balance as when she graduated.
“Even though I’ve made payments, I’ve still made a very small dent in the loans,” she says.
‘Rage-Inducing’: Las Vegas Freelancer Has Watched Debt Double
Bryan is bracing for an estimated $380 in monthly student loan payments at a time when he can least afford it. The 43-year-old Las Vegas-based human resources consultant says he and his wife have been slashing expenses ever since she was laid off from her job over a year ago.
“We started cutting back months ago in preparation, and it may not be enough,” Bryan says. “That’s the part that’s really scary, because there’s no safety net in this country.”
He graduated from law school almost 20 years ago with about $200,000 in loans, and has watched his balance nearly double despite making payments on income-driven plans. Because of the freelance nature of his business, his income can fluctuate considerably from month to month, although he says he might bring in a little over $100,000 in a typical year. The climbing balance combined with the drop in income as his wife searches for work is frustrating for them.
I appreciated the Biden administration’s push and effort, but I ultimately don’t think it was the right approach because of what we’re in now.
“Less coming in and a debt that keeps growing is rage-inducing,” he says, noting that he believes he’s come close to paying the entire initial balance by this point. He’s only about five or six years away from loan forgiveness, although he’ll likely face a high tax bill when that happens.
Bryan and his wife have trimmed spending in numerous areas, from canceling streaming services to reevaluating healthcare options. They’ve also reduced their entertainment budget.
“We don’t eat out as much anymore,” he says. “We don’t take as many trips. We don’t go to the casinos as much — not that we did that a ton, but it’s something unique about living here.”
While he doesn’t have time outside of his business to take on a side gig, his wife has found ways to bring in extra money, including working a poll station during the recent Nevada primary.
Bryan says the increases that many borrowers are now facing simply add to the high cost of housing and groceries, further cementing a general feeling of unaffordability.
“I did everything I was told to do, yet the rules and costs keep changing underneath me,” he says. “When corporations are underwater, it’s a bailout. But when it’s an individual? Personal responsibility, get another job, find your bootstraps.”
He says that when the SAVE plan was first introduced, he feared that the pendulum would swing back when a new administration took office.
“I appreciated the Biden administration’s push and effort,” Bryan says. “But I ultimately don’t think it was the right approach because of what we’re in now.”
Juggling Vet Bills and Student Loans: Minnesotan Hopes 3 Jobs Are Enough
Libby says her last day off was New Year’s Day. The 38-year-old, who lives with her husband outside Minneapolis, supplements her 9-to-5 position as a Power Platform developer with side jobs as a dog behavior consultant and dog walker.
Animals play a major role in her life. Not long ago, she had six dogs and cats, although three have recently died due to old age.
“We have nice things,” Libby says, explaining how she tries to take a glass-half-full view of life as she prepares for her student loan payments to nearly double to $1,000 monthly. “And by that I mean dogs.”
She says she brings in around $105,000 a year, which she’s hoping will be enough to maintain payments on the roughly $85,000 in student loan debt she’s accumulated to earn three degrees. After graduating with a marketing degree at the height of the financial crisis, she immediately entered an MBA program, postponing a job search that appeared fruitless at that time. But her prospects hadn’t brightened much after the graduate degree, so she returned for two more years to get a wildlife biology degree.
There are a lot of people who are getting hit a lot harder. And I’m going to try not to cry, but that’s what breaks my heart.
Although she briefly considered switching to a standard repayment plan to get the debt paid off sooner, she has now settled on seeking loan forgiveness under an income-driven repayment plan.
“I will perpetually pay just enough that I don’t have the government coming after me,” Libby says.
She’ll need to find a way to fit her student loan bill into a budget that includes a $1,800 monthly mortgage payment and veterinary costs that at times can be eye-popping. She estimates that she spent nearly $50,000 over a six-month period on care for one of her dogs.
Worries about student loans have caused Libby and her husband to ponder drastic measures to trim payments.
Last year, amid reports that the Trump administration may go back to considering a spouse’s income when determining loan payment amounts for those who are married filing separately, the happily married couple actually discussed whether they should get divorced if it would keep their payments down. Her mom cried when they pitched the possibility.
“I think some people thought I was joking, but I was not,” she says, adding that the couple would have continued to live together. “Which is kind of sad.”
But Libby says her biggest concerns surrounding the end of SAVE is that many other people aren’t as prepared as she is for the higher payments.
“If you’re worried about if you have a roof over your head or if you can pay your bills and what you’re going to eat, you can’t always show up to work as the best form of yourself,” she says. “I think that’s a hurdle that a lot of people are going to start experiencing, and that could potentially be a barrier to them earning more.
“There are a lot of people who are getting hit a lot harder. And I’m going to try not to cry, but that’s what breaks my heart.”
More from U.S. News
originally appeared on
