CINCINNATI — With commencement on the horizon for many colleges and universities, the Trump administration is giving student loan borrowers a 90-day window to find a new repayment option after a federal appeals court blocked the SAVE plan.
That means 7.5 million student loan borrowers must switch their repayment options as the plan comes to an end, according to the U.S. Department of Education.
The SAVE plan, otherwise known as the "Saving on a Valuable Education" plan, was started by the Biden administration as a way to forgive student loans.
After nearly two years of litigation, a federal court ended the plan in March.
Starting July 1, under the One Big Beautiful Big Act, existing repayment options such as the SAVE plan will be replaced with the Repayment Assistance Plan, also known as RAP. The new plan sets minimum payments at $10 and is calculated based on adjusted gross income.
Financial fitness coach Al Riddick with Game Time Budgeting shared what students should know about the transition.
"The government is saying that they want to help students get out of default. I can understand that, but at the end of the day, it still all goes back to producing enough income to satisfy the student loan payment that you will be responsible for," Riddick said.
WATCH: What students need to know about changes to student loans
Another new option is the Tiered Standard Repayment Plan, which gives borrowers an option to extend their loan term for 10, 15, 20 or 25 years.
"Your monthly payment may be lower, but keep in mind when you add up all of the interest over 30 years ... you're paying that back three times over," Riddick said.
Borrowers who plan to further their education should check out the new loan limits.
"At the end of the day, you want to make that gap between income and spending as wide as possible. The more cash flow you can generate, the more you're setting yourself up to make different options with your money," Riddick said.
If borrowers do not sign up for these plans by the July 1 deadline, the U.S. Department of Education will automatically move their plan to one of the newer versions.
Borrowers can visit studentaid.gov to roll over their plans.
