New York Attorney General Letitia James urges SAVE plan borrowers to choose a new student loan repayment option before automatic enrollment

New York – New York Attorney General Letitia James is encouraging borrowers enrolled in the federal Saving on a Valuable Education (SAVE) plan to begin preparing now for major changes that could affect their monthly student loan payments. As the federal government moves forward with ending the program, borrowers are being urged to carefully review their repayment options instead of waiting until they are automatically placed into a new plan.

The consumer alert comes as federal student loan servicers begin notifying borrowers that the SAVE plan is coming to an end. Starting July 1, 2026, individuals enrolled in the program began receiving official notices explaining that they must select a different repayment option. Those who fail to make a choice within 90 days after receiving their notification will most likely be transferred automatically into the Standard Repayment Plan.

Attorney General James warned that allowing the transition to happen automatically may lead to significantly higher monthly payments for many borrowers because the Standard Plan does not take income into consideration.

“As federal cuts change student loan programs across the country, my office is here to ensure New Yorkers have all the facts about their loan options,” said Attorney General James. “Student loans are already a heavy burden, and no New Yorker should find themselves in an expensive repayment plan they didn’t choose. New Yorkers enrolled in SAVE plans should start searching for an alternative repayment plan to get ahead of this transition.”

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The SAVE plan was introduced in 2023 as an income-driven repayment program designed to lower monthly student loan payments for eligible borrowers. It quickly became one of the most affordable federal repayment options by adjusting payments based on a borrower’s income and family size.

However, the program’s future changed after legal challenges. In 2024, a federal court ordered the U.S. Department of Education to place all borrowers enrolled in SAVE into mandatory forbearance while legal issues surrounding the program were addressed. The court’s decision ultimately led to the termination of the repayment plan. Later, in December 2025, the Trump administration announced the steps it would take to formally end the SAVE program.

Now that the transition process has begun, borrowers are entering a critical decision period. Once they receive notice from their loan servicer that their SAVE forbearance is ending, they have a 90-day window to choose a different repayment plan. If no action is taken before that deadline expires, borrowers will likely be placed in the Standard Plan by default.

For many people, that automatic enrollment could have significant financial consequences. Unlike income-driven repayment plans, the Standard Plan requires fixed monthly payments that are not adjusted based on earnings. As a result, borrowers with modest incomes could face substantially larger monthly bills than they previously paid under SAVE.

The options available to borrowers will depend largely on when their federal loans were last disbursed or consolidated.

Those whose most recent federal loan was issued or consolidated before July 1, 2026, may have several repayment choices available. These include Income-Based Repayment (IBR), Pay as You Earn (PAYE), Income-Contingent Repayment (ICR), the newly introduced Repayment Assistance Plan (RAP), as well as traditional repayment plans such as Standard, Graduated, and Extended repayment.

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The Repayment Assistance Plan officially became available on July 1, 2026, providing another repayment alternative for eligible borrowers as the federal student loan system continues to evolve.

Although existing borrowers may still qualify for the PAYE and ICR repayment plans for the time being, that opportunity is temporary. Federal officials have indicated that everyone enrolled in either PAYE or ICR will also need to transition into a different repayment option by July 1, 2028.

Borrowers with newer loans face a more limited set of choices. Individuals whose most recent federal student loan is disbursed or consolidated on or after July 1, 2026, will generally be able to choose only between the Repayment Assistance Plan and the Standard Repayment Plan.

Given these changes, Attorney General James is encouraging borrowers not to delay reviewing their repayment options. Understanding the differences between available plans could help borrowers avoid unexpectedly high monthly payments and choose a repayment strategy that better fits their financial situation.

To help borrowers navigate the transition, New Yorkers can receive free, personalized guidance through the Education Debt Consumer Assistance Program (EDCAP). The program provides one-on-one assistance for borrowers seeking to understand repayment plans, evaluate eligibility requirements, and determine which option may best suit their circumstances.

Borrowers can contact EDCAP by calling 888-614-5004 or by emailing [email protected]. Additional information about moving away from the SAVE plan is available through EDCAP’s online resources, while broader information on federal student lending and repayment options can also be found in the New York Attorney General’s Student Lending guide.

With notification letters now reaching borrowers across the state, officials say acting early is the best way to avoid being placed into a repayment plan that may not reflect a borrower’s financial circumstances. Reviewing available options before the 90-day deadline, they stress, could make a meaningful difference in managing student loan costs in the years ahead.