The student loan repayment plan, Saving on a Valuable Education (SAVE), introduced by former President Joe Biden will officially cease in light of the passage of President Donald Trump’s One Big Beautiful Bill Act last summer.
An estimated 269,000 North Carolina borrowers who are enrolled in SAVE will need to select a new repayment option within 90 days after July 1.
Just two repayment plan options — the Tiered Standard Plan and Repayment Assistance Plan — will be available once SAVE dissolves and the Income-Contingent Repayment plan and the Pay As You Earn plan are sunset in 2028.
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Under the Tiered Standard Plan, the monthly payment will be a fixed amount in a certain amount of time depending on the outstanding principal balance, the amount of money borrowed not including interest. Payments must be at least $50 a month but can be more if it’s needed to repay within the allotted time.
For example, those that owe less than $25,000 must complete repayment in 10 years. Borrowers who owe greater than $25,000 but less than $50,000 — the average federal student loan debt is $39,075 per borrower — have 15 years to complete repayment. Those with $100,000 or more in debt have up to 25 years.
Alternatively, required monthly payments on the Repayment Assistance Plan are dependent on the borrower’s income and number of dependents. The U.S. Department of Education uses tax information to calculate the monthly payment amount, and it could change if income or number of dependents change.
“Your required monthly payment amount under the Repayment Assistance Plan is a percentage of your annual income, most commonly your adjusted gross income (AGI), divided by 12 to determine the monthly payment amount,” the Department’s website states.
“Your monthly payment amount is then reduced by $50 for each dependent you claim on your federal tax return; however, your monthly payment may not be less than $10 a month. The percentage of your annual income varies depending on your AGI …”
Monthly payments will be reduced if a borrower’s spouse also has federal student loans and tax returns are filed together. If borrowers are married but file separately, only income and dependents will be considered.
Choosing a new plan
Some might have not kept track of their loans in recent years given how many pauses and relief attempts have been provided by the government since the pandemic. In that case, Tia Anderson, program services representative for North Carolina’s nonprofit lender NC Assist, said it’s important to start to refamiliarize yourself with the status of your loan, especially as SAVE goes away.
“Now you’re going to have a lot of families asking the question of ‘What’s going to work best for my student or work best for me?’” she said.
“This is the time now to look into those loans. If you’re an existing borrower, maybe it’s been years since you’ve graduated, maybe you’ve gone through forbearance, maybe you have not been as active in paying on those student loans. Now is the crucial time to seek out your loan provider, make sure that they have the correct information to reach you, as well as keep a track of the emails that you are receiving from the Department of Education.”
Federal and private loans will still be treated differently in terms of repayment, as the changes going into effect from Trump’s OBBBA only apply to federal loans, like this distributed via the Free Application for Federal Student Aid (FAFSA). It’s important to be knowledgeable about where your loans came from and act accordingly if they are federal, private or a mix of both, Anderson said.
Several factors could go into how borrowers should choose which plan to switch to, whether it’s a growing family or thinking about obtaining another degree soon. The Repayment Assistance Plan, which considers current gross income, could be a good option for those who are still early in their career or are low earners.
Ultimately, it’s important to make the decision within the 90 day window after July 1 rather than having the decision made for you, Anderson said.
Alternative programs after SAVE
Aside from impacting existing borrowers, the rollback of SAVE, student loan forgiveness and certain repayment plans might be a deterrent for students who want to attend college but are concerned about what they might owe later. But it’s important to not let fluctuations in loan and repayment options influence those big life decisions, Anderson said.
“If you are a student that is considering college, and there’s a lot of conversation happening around student loan repayment, I would definitely still encourage students to seek out what their dreams are, their educational dreams,” Anderson said.
“There’s going to be a number of support systems specifically here in the state of North Carolina to help students get there.”
Nonprofit lender NC Assist helps North Carolina residents afford college through its private loan program for parents or students with fixed rates and no fees.
“Being a nonprofit lender here in the state allows families to know that there is a lender that’s being mindful of affordability and accessibility for students,” Anderson said.
“So before shopping around, if you are needing to rely on private loans this upcoming semester here in the state of North Carolina, I would definitely encourage you to consider NC Assist as an option prior to moving forward, just because in comparison to other lenders here in the state of North Carolina, we do have the mission of making sure that it is affordable and accessible for families.”
There’s also a number of loan assistance programs for workers in specialized fields like teaching and healthcare.
The Licensed Workforce Loan Repayment Program will help pay up to $50,000 of debt for Licensed Clinical Social Workers, Licensed Clinical Mental Health Counselors, Licensed Clinical Addiction Specialists, Licensed Marriage and Family Therapists, Licensed Psychologists and Licensed Psychological Associates who work at an eligible agency in a rural area and provide services in mental health, substance use, intellectual and developmental disabilities or traumatic brain injuries.
The NC Loan Repayment Program also offers assistance for healthcare workers with specialties like family medicine, general pediatrics and psychiatry serving in rural areas.
Future educators can consider joining the North Carolina Teaching Fellows Program if they plan on teaching a STEM subject or special education in a state public school. A number of both education and healthcare roles have the potential to be covered by the Forgivable Education Loans for Service if they have obtained proper licensing.
As North Carolinians navigate paying back loans without SAVE, organizations like College for North Carolina can help educate students and families further on their options, as well as individual university financial aid offices.
“The anxiety is valid — we’re humans,” Anderson said. “It’s something to consider. It’s something to process, and we don’t expect that to happen overnight for individuals. …
“In this time of considering these new repayment options, at the end of the day, the only one who can make the best decision is the person themselves. Right now, especially as you’re seeking information, you’re trying to get a better understanding of what these repayment options are, doing the proper research and talking to a professional is always encouraged.”
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