Department of Education to Notify SAVE Borrowers of July 1 Deadline to Switch Plans or Enter Standard Repayment

Beginning July 1, the Department of Education will notify student-loan borrowers enrolled in the SAVE plan of their deadline to transfer to a new repayment plan. Borrowers will have 90 days after receiving the notice to select an option. Borrowers who do not choose a new plan within the 90-day window will be placed automatically in either the standard repayment plan or the new tiered standard plan.

An email reviewed by Business Insider stated that monthly payment amounts will most likely go up if borrowers are enrolled in either of these plans. The tiered standard plan will become available after July 1 and will require borrowers to repay their loans in full over a period based on the amount of their principal balance, with a minimum payment of $50 a month.

The new Repayment Assistance Plan will also become available in July and will calculate a borrower's monthly payment based on their adjusted gross income.

President Donald Trump eliminated the SAVE plan. Some borrowers have already said that their payments are projected to surge by hundreds of dollars on the Repayment Assistance Plan. Over 60 Democratic lawmakers recently urged the Department of Education to automatically enroll every borrower currently in the SAVE forbearance in the lowest cost repayment plan currently available to that borrower.

The lawmakers wrote that the department should take this step to mitigate the potentially devastating financial impact of this transition. Other provisions of Trump's spending legislation will soon go into effect, including new borrowing caps on advanced degrees and changes to the amounts parents can borrow for their kids' education.