Millions of federal student loan borrowers mired in a glitchy repayment process will soon face higher payments if they fail to get off of a low-cost plan that the Trump administration fought to end.
The Education Department will place borrowers in the most expensive student loan repayment plan if they don’t exit the Saving on a Valuable Education repayment plan — a defunct Biden-era program — in the coming months.
But some borrowers say the department’s system glitches have made it difficult to select a different plan.
Borrowers have complained of conflicting information, limited access to critical payment histories and disruptions to an online calculator designed to help them pick a plan. Some say the entire process is overwhelming and that they are frustrated. The Education Department says these hiccups have been largely resolved and is encouraging people to take action.
The department is trying to move 7.5 million people off Save. The plan had offered lower monthly payments and a faster path to loan forgiveness, but it was felled last year by legal challenges and legislation. Because of the legal morass, the Education Department has postponed payments for Save enrollees for the last two years. But that break is coming to an end.
Federal loan servicers started telling borrowers July 1 to choose another plan within 90 days or be automatically placed in the standard plan, which divides the entire loan balance into fixed, equal payments over 10 years. That would be a jarring change for many Save enrollees, as nearly half have incomes low enough to qualify for zero-dollar monthly payments on the defunct plan.
Notices have gone out in waves to stagger the deadlines, and 75 percent of borrowers have been contacted to date, according to the Education Department. The remaining people will be notified by the end of the year. The 90-day window for the first group of people notified closes Sept. 29, but departures from the Save plan have been slow.
Only around 18 percent of the 7.5 million people on Save have left the plan since the department announced its exit strategy in March. The numbers are low considering the Trump administration has urged borrowers to leave Save since Congress abolished the plan through the 2025 tax law.
Undersecretary of Education Nicholas Kent lauded the progress made to date.
“We’re pleased that more than 1.32 million borrowers have already selected a new repayment plan, allowing them to make progress toward paying down their balances,” Kent said in a statement.
According to the Education Department, nearly half of the borrowers who have exited Save have enrolled in the Income-Based Repayment (IBR) Plan, in which borrowers pay 10 percent or 15 percent of their discretionary income for 20 or 25 years before the balance is forgiven.
Sixteen percent have chosen the Repayment Assistance Plan, a new income-driven program with a 30-year term. About 14 percent switched to the Pay as You Earn Plan, which lets borrowers pay 10 percent of their discretionary income for 20 years.
For Emily Vaughn, 34, every repayment option would mean a tremendous increase from the $10 a month she had paid on the Save plan. The paralegal in Virginia said her best option is the IBR plan at $233 a month, but the added expense will be difficult to absorb. Vaughn’s income primarily supports her family of four, and she said their budget is already stretched thin.
She is also wary about selecting a new plan because of an ongoing dispute over her loan balance. Despite paying down her debt to $35,000 during the pandemic, Vaughn said the Education Department has no records of her recent payments and claims she owes $10,000 more.
“I’ve spent hours on hold waiting to talk to someone about my case, and no one picks up,” Vaughn said in a recent interview. “I’ve got 30 days to make a decision based off limited and inaccurate information that’s available on the website.”
Natalia Abrams, president of the advocacy group Student Debt Crisis Center, said she is hearing from borrowers who are running into all sorts of problems as they try to exit the Save plan. Some have received multiple 90-day notices from their loan servicer, leaving them confused about which deadline to follow. One borrower shared screenshots with The Washington Post of the three notices she received throughout July.
“If a borrower receives conflicting guidance from a servicer and cannot address the misunderstanding with said servicer, they should submit feedback via the Ombudsman office,” said Ellen Keast, a spokesperson for the Education Department. “Also, the safest route a borrower can take is to leave the unlawful Save plan today.”
Scott Buchanan, executive director of the Student Loan Servicing Alliance, said there were a handful of people who received incorrect notices early on, but the situation has been addressed. He suspects borrowers may be confused by the volume of emails from their servicers and the department about the end of Save, but he said they will receive only one official letter that starts the 90-day clock.
“There’s a lot of confusion,” said Abrams. “There are people who can’t afford any of the other plans, and then there’s confusion because of the contradictory information and outages.”
Briana Clancy, a 35-year-old communications manager in Connecticut, said she was hit with one error message after another when she tried to pull up her account on StudentAid.gov this week. She tried logging in to get a more detailed breakdown of her repayment options but got an alert that the option was down because of planned maintenance.
When Nicholas Iovino, 42, tried to use the Education Department’s repayment calculator last month, the online tool was completely unavailable. He also had trouble accessing his payment history because the department was updating the system that displays borrowers’ progress toward loan forgiveness under income-driven repayment plans. While the calculator was eventually restored, the payment count is still down.
Iovino, who owes about $48,000 from grad school, has been repaying his loans through an income-driven plan for close to 10 years. He wants confirmation of how many of his payments count toward loan forgiveness before selecting a new plan.
“Without knowing my payment count, it is difficult to determine whether I should choose a plan based on reaching forgiveness or lowering my monthly payment,” said Iovino, who works in public relations for a college in California. He said he has to carefully weigh his options because nearly half of his pay already goes to rent.
Switching to another income-driven plan would more than double his payment, which on Save was just over $200 a month. Iovino could keep his payment around the same amount if he selects a plan that would have his loans paid off in 25 years, but that means being stuck in debt for decades.
“They’re putting pressure on us to pick a plan that’s going to affect our finances and our future without any guidance or the information you need to make the decision,” Iovino said. “It’s very frustrating and makes you feel like no one cares.”
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