The Trump administration is dismantling the Biden-era SAVE repayment plan, forcing roughly seven million borrowers to choose new repayment options starting July 1. These borrowers, who have enjoyed the most affordable income-driven plan to date, face restarting payments after nearly two years of legal limbo.

Borrowers will select between the existing IBR plan and the new RAP program. RAP offers graduated payments from 1-10% of income with a 30-year term, featuring principal reduction guarantees and interest waivers. However, the plan lacks inflation indexing, meaning payments could double over 20 years even with modest income growth.

These changes arrive as inflation rebounds and household costs rise, creating financial pressure for many families. Betsy Mayotte of The Institute of Student Loan Advisors notes widespread anxiety about multiple financial pressures hitting simultaneously. Borrowers must act before servicers automatically assign them to the standard 10-year repayment plan, likely resulting in higher monthly payments.