Credible takeaways
- Even though the SAVE Plan will end by July 2028, I’m staying in it for now to maintain some repayment flexibility.
- Time spent in SAVE Plan forbearance doesn’t count toward forgiveness programs, making it a risky move for borrowers focused on long-term forgiveness.
- Now that interest has resumed, I’m making at least interest-only payments to keep my balance from growing and stay on track financially.
- I plan to reassess my options and may switch to the new Repayment Assistance Plan once it’s clearer how the new repayment plans will work.
When the Saving on a Valuable Education (SAVE) Plan rolled out in August 2023, I signed up right away, one of 7.7 million federal student loan borrowers hopeful that this new system would help make repayment manageable.
Coming from a financially unstable household, the idea of tying my federal student loan payments to income and family size instead of loan balance felt like a lifeline. I was unemployed, still in grad school, and learning to live with a new sense of financial caution. For a while, it worked.
Then, in 2024, federal courts halted the SAVE Plan, and the Department of Education responded by moving borrowers into interest-deferred forbearance, a holding pattern that froze progress just as many of us were getting our footing.
Now, with the program on track to be phased out by 2028 and interest charges back in effect, staying in the SAVE Plan may seem risky. But for me, it’s a calculated choice. I’m holding on for now — not because I expect it to last, but because switching too soon could mean losing out on temporary benefits while the next repayment system takes shape.
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My federal student loan repayment journey
I was one of the lucky ones who earned an undergraduate degree with little student loan debt. The average student graduates from college owing $29,560 in student loans, according to College Board. I left with less than half that.
Having funded my bachelor’s degree primarily with scholarships and grants, I felt comfortable taking out federal unsubsidized loans for graduate school. Before borrowing, I carefully considered repayment.
I kept in mind a common repayment guideline: Your post-grad salary in the first year should match or exceed your total debt at graduation. This helps keep payments more manageable. However, Will Geiger, cofounder of Scholarships360, points out that the calculation is more nuanced.
He advises that, since salaries vary widely by field and role, students should research average earnings for their intended career using resources such as the federal government’s College Scorecard.
“A lawyer at a corporate firm might earn significantly more than a public defender, even though both require the same degree,” Geiger says.
So, I didn’t borrow more for my graduate degree than I was earning at my full-time job. While in grad school, I continued repaying my undergraduate loans — paying off one entirely — and started making minimum payments on my graduate student loans. Because those loans are unsubsidized, they begin accruing interest immediately.
SAVE Plan forbearance and what it means for forgiveness
Unlike typical forbearance, borrowers enrolled in the SAVE Plan did not accrue interest from July 2024 to July 2025. I remained in the SAVE Plan to take advantage of this benefit while continuing to make payments, including paying off one of the six loans — a strategic move with many advantages.
Good to know
Forbearance is typically a temporary pause on loan payments. During standard forbearance, interest usually accrues, and the time does not count toward loan forgiveness programs.
“The primary benefit is reducing the loan principal faster, which lowers the total interest paid over time and accelerates the path to being debt-free,” Geiger explains. “Additionally, continuing payments helps maintain the habit of budgeting for loan repayments, which can ease the transition once payments resume.”
However, it wasn't the best option for every borrower. Geiger notes a key drawback: “The money used for payments could have been allocated to savings, emergency funds, or other financial priorities, especially if cash flow was tight.”
Borrowers on the SAVE Plan began accruing interest on Aug. 1, 2025. And the time spent with loans in forbearance, even the interest-deferred phase, doesn’t count toward any forgiveness programs. This is a critical distinction.
Because existing income-driven repayment plans, including SAVE, will all be phased out by July 2028, I feel no immediate pressure to switch plans before the final deadline. I don't plan to change jobs anytime soon and am not pursuing any loan forgiveness options.
Important dates for SAVE Plan borrowers
Under federal legislation, these are the key dates for SAVE Plan borrowers:
- July 2025: The SAVE Plan and older IDR plans will begin to be phased out.
- July 2026: New student borrowers can choose between the Repayment Assistance Plan (RAP) or the standard plan.
- June 30, 2028: Deadline for existing borrowers to switch plans.
So for now, I’m sitting tight and waiting to see what we end up with. I’ll likely join the new RAP before 2028.
Why I chose the SAVE Plan for repaying my student loans
I immediately enrolled in the SAVE Plan when it was introduced, as I was newly unemployed and still in graduate school. Already managing payments on my undergraduate loans and making interest-only payments toward my new graduate loans, I saw SAVE as a safety net.
The SAVE Plan offered two things that really appealed to me:
- Zero-interest growth: The SAVE Plan promised that, as long as I make my minimum monthly payment, any remaining interest would be waived. It provides a crucial safety net, ensuring my loan balance would not balloon from unpaid interest.
- Lower payment cap: The SAVE Plan caps payments for graduate loans at 10% of discretionary income, compared with 20% for some other IDR plans. While I intend to earn more, this lower cap is an invaluable safeguard against potential financial hardship, guaranteeing I can always afford the minimum payment.
After being laid off during graduate school, I realized I couldn’t count on my salary being equal to or greater than my loan amount, and learned I had to be flexible. Besides, I figured I could make extra payments along the way if my income grew or my budget allowed.
My new student loan repayment strategy now that interest is back
While interest has resumed, borrowers’ accounts remain in forbearance as of early November 2025, so making at least interest-only payments is a wise financial move to prevent the balance from growing.
The debt snowball and debt avalanche are two methods to repay debt.
Debt snowball vs debt avalanche
- Debt snowball: This method targets the smallest debts first. You make minimum payments toward all your debts and make extra payments toward your smallest debt first. After you knock that off, continue the strategy by focusing on the next smallest debt and so on. While you may not save on interest, this method can provide quick wins and keep you motivated.
- Debt avalanche: In contrast, this method focuses on the highest-interest debt. You make minimum payments, but any extra payments go toward the debt with the highest interest rate. While you may not see quick wins, and paying off individual debts may take longer, especially if the high-interest debt is a larger loan, this method can save you money on interest in the long run.
I use the debt avalanche method because my highest-interest debt is at 7.5%, while my lowest (and smallest) debt is only 4%. It may take longer to pay off, but it is worth it for me to save money on interest.
Why staying in the SAVE Plan might not work for everyone
Borrowers in the SAVE Plan are in forbearance, which means monthly payments aren’t required. While that pause may offer short-term relief, it also prevents borrowers from earning credit toward forgiveness programs such as Public Service Loan Forgiveness (PSLF) or Income-Driven Repayment (IDR) forgiveness — both of which require consistent, on-time payments.
Adam S. Minsky, a Boston, Massachusetts-based student loan attorney, suggests switching plans sooner rather than later or looking into the buyback program.
“Borrowers should explore switching to a different IDR plan if they want to continue making progress toward PSLF,” he says. “Those who were close to their 120th qualifying PSLF payment when the SAVE Plan forbearance began last summer can also look into PSLF Buyback, although that program is currently plagued by a significant application backlog.”
The SAVE Plan has been in flux nearly as long as it has existed, and I’m taking a wait-and-see approach. While it is set to be phased out by 2028, I have no interest in joining another income-driven plan that will be eliminated soon.
Knowing your repayment choices now can save you a lot of money in the future, no matter what you decide to do.
