Should You Switch Plans Now?

Borrowers enrolled in the SAVE plan must now decide whether to remain in forbearance or switch to another income-driven repayment plan. On August 1, interest will begin to accrue for borrowers still in SAVE forbearance due to the 8th Circuit Court injunction. Payments are not due, but the cost of waiting could be high for some.

There are pros and cons to moving plans now versus waiting, and there’s no one-size-fits-all answer. The decision depends on your own financial situation and budget, along with your goals – are you going for loan forgiveness? Are you trying to pay off the loan? What does your payment history and future timeline look like?

But with interest beginning in weeks, the question is urgent: stay in limbo, or start the clock again under a legally recognized plan like Income-Based Repayment (IBR)? And what about the future changes in 2026 with the new Repayment Assistance Plan (RAP)? The answer isn’t straightforward and there are still some unknowns.

Here’s what to think about when it comes to leaving SAVE now.

When Switching To IBR Makes Sense

Borrowers aiming for Public Service Loan Forgiveness or general income-driven repayment plan loan forgiveness should likely consider switching sooner, rather than later. IBR remains available, and forgiveness under that plan is not currently blocked.

A graduate borrower with a $150,000 loan at 6.8% interest who has already paid for 10 years could accrue about $850 in interest per month starting August. Over six months, that’s more than $5,000 added to the loan balance, all while delaying both PSLF and IDR-related loan forgiveness. 

Switching to IBR now wouldn’t stop the interest, but payments would help offset that and each payment would resume forgiveness progress.

Assuming a discretionary income of $60,000, a single person under old IBR would see a payment of about $460 per month. Costly, but not as costly as watching the balance grow with no end in sight. Plus, the student loan tax bomb is returning in 2026 for IDR-related loan forgiveness, so any progress can potentially help minimize that burden.

In 2026, the Repayment Assistance Plan (RAP) also becomes available and may be an option that’s better. You can move from IBR to RAP, and keep your payment history (side note: you cannot move back from RAP to IBR an keep your payment history – so no taking lower RAP payments but then switching back to 25 year loan forgiveness).

What about PSLF buyback? It’s an option, but with PSLF buyback delays reaching 7-8 months, and the future of PSLF buyback uncertain, getting qualifying payments “the old fashioned way” may be a better choice for most.

PAYE May Help For A Few Months

Unlike IBR, forgiveness under Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) is currently blocked, but the repayment plans remain open to make monthly payments. Furthermore, PAYE and ICR are being eliminated sometime between July 2026 and June 2028. These borrowers would migrate to the amended IBR during that period.

However, there is a unique group of borrowers that may benefit in the short term by switching to PAYE. For borrowers who took out their first Direct Loan between October 1, 2011 and June 30, 2014, you’ll eventually end up in old IBR, which is 15% of your discretionary income. But PAYE is set at 10% of your discretionary income.

If you’re looking to get PSLF qualifying payments, or IDR-related loan forgiveness qualifying payments, switching to PAYE now will at least give you a lower payment until the Amended IBR transition. That might only be 11 months, or it could be several years – it all depends on when the transition is required to be completed by (which we’re awaiting Department of Education guidance on).

It might not seem like much, but using the example above ($150,000 in loans making $60,000 per year), the PAYE monthly payment would only be about $310 per month, versus the $460 per month on old IBR. That’s a savings of $150 per month. That’s an $1,800 per year savings for each year you can ride it out in PAYE – all while getting credits towards PSLF and IDR loan forgiveness.

When Staying In The SAVE Forbearance Makes Sense

For borrowers with lower incomes or little progress toward loan forgiveness, the short-term financial breathing room may be more valuable than starting payments now. At the end of the day, your monthly budget matters the most – and if you need to finish paying off other debts or make room in the budget to resume your student loan payments, you have to do that first.

And honestly, it’s not that expensive for most borrowers to remain in the SAVE administrative forbearance.

An undergraduate borrower with $30,000 in loans at an average of 5% interest, for example, would see monthly interest of around $125 starting in August. Over six months, that’s $750 in interest that would be added to your balance.

Yes, it is something… but if you can’t afford it, you can’t afford it. Or, if you’re using these months to eliminate other debt, then continue that process as the ROI will likely be higher.

In some cases, there may be PSLF buyback for borrowers that qualify.

Finally, there is always waiting for the RAP transition. For some borrowers, RAP is a better option than IBR – especially lower income borrowers. So continuing to wait in forbearance and making one switch to RAP in July 2026 may be the savviest option financially – even with the added interest. Plus, the future RAP plan will subsidize unpaid interest each month, and give at least $50/mo to principal if your payment doesn’t cover it. 

Check out both our regular Student Loan Calculator and RAP Plan Calculator to see which could be the most beneficial.

Final Thoughts

High-balance graduate borrowers with substantial repayment history should strongly consider switching to IBR before interest kicks in. Also, borrowers going for PSLF should likely switch as well, to restart getting qualifying payments. Doing so keeps forgiveness progress on track and avoids ballooning balances.

Those unable to afford IBR payments may need to ride out the forbearance, monitor updates, and prepare for RAP. Remember, just because interest is resuming for SAVE plan borrowers, payments are still not due. And the earliest it appears SAVE plan payments could be due is December 2025.

If you’re in the SAVE plan forbearance, please spend some time over the next couple weeks assessing your options and making a plan. But also realize the plan could change again in December, and could change again in July 2026. The key, though, is to know your own goal: loan forgiveness or repay the loan. That focus will help guide your overall decision. 

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