7 Million SAVE Borrowers Face Higher Payments Under New Repayment Rules

Starting July 1, the Education Department will warn borrowers on the SAVE income-driven plan to switch to a different repayment option. If they don’t act within 90 days, they’ll be automatically placed in either the standard or the new tiered standard plan, both generally more expensive than current income-driven options. The tiered standard plan would require paying off the principal over a set term with a $50 minimum monthly payment, while the Repayment Assistance Plan (RAP) would base payments on adjusted gross income and is also costlier than existing options. Lawmakers are urging automatic enrollment in the cheapest available plan, while the changes coincide with broader provisions from a recent spending bill that affect borrowing limits for advanced degrees and parental loans.