'Shameful': Trump Threatens to Redirect Student Loan Borrowers to Most Expensive Repayment Plans
More than 7 million borrowers booted from a Biden-era loan forgiveness program will have to quickly switch to a new plan using a system that's been backed up for months.
After axing a Biden-era student loan repayment program, the Trump administration is threatening to kick its millions of mostly low-income beneficiaries onto the government's most expensive plan unless they switch to a new one quickly.
The Washington Post reported on Friday that the Department of Education was beginning to email the more than 7 million people enrolled in the Saving on a Valuable Education (SAVE) program, telling them they needed to change their plan within the next 90 days.
Around 4.5 million of those borrowers earn incomes between 150% and 225%, allowing them to qualify for zero-dollar monthly payments under SAVE, which the Trump administration effectively killed in December after settling with Republican states who'd brought lawsuits against the program under former President Joe Biden.
Anonymous officials told The Post that those who do not switch plans within three months of receiving the email will automatically be re-enrolled in the Standard Plan. Unlike SAVE, which is income-based, the Standard plan has borrowers pay a fixed rate over 10 years.
Standard typically carries the highest monthly payments, and those transitioning to it from SAVE could pay more than $300 extra per month in some cases, with the poorest borrowers seeing the sharpest increases.
While 90 days may seem like plenty of time to switch to a less expensive repayment plan, it's not nearly that simple.
Due to the large exodus of borrowers, the Department of Education has struggled to process all the forms, processing only about 250,000 per month. Many borrowers who have tried to transition have found themselves waiting months for a reply.
To make matters more confusing, many of these borrowers will have to switch programs again soon, since all but one repayment program will be dissolved on July 1, 2028 as a result of last year's Republican budget law. The remaining plan will also be income-driven, though it is still expected to cost borrowers more each month.
According to a report released last month by the Century Foundation and Protect Borrowers, two groups that support loan forgiveness, nearly 9 million student loan borrowers are in default. During Trump's first year back in office, the student loan delinquency rate jumped from roughly zero to 25%, which it called "precedent-shattering."
"Much of the rise in delinquencies can be linked to the Trump administration’s actions aimed at increasing student loan payments," the report said. “The US Department of Education blocked borrowers from accessing more affordable payments through income-driven plans, having ordered a stoppage in application processing for three months and mass-denying 328,000 applications in August 2025. As of December 31, 2025, a warehouse’s worth of 734,000 applications sat unprocessed.”
Being in default has major ramifications for borrowers' finances. Those with delinquent loans saw their credit scores decrease by an average of 57 points during the first three quarters of 2025, dragging around 2 million of them into "subprime" territory, which forces them to pay thousands of dollars more for auto and personal loans and makes them more likely to have difficulty finding housing and employment.
The report estimated that if those booted from SAVE defaulted at the same rate as other borrowers, the number of student loan borrowers in distress could rise as high as 17 million.
According to Protect Borrowers, the typical family will pay more than $3,000 per year in additional costs as a result of the end of SAVE.
The end of SAVE comes as oil shocks caused by Trump's war in Iran have spiked gas prices and threaten to raise them throughout the economy, adding to the already elevated costs of food, housing, and transportation resulting from the president's aggressive tariff regime.
"In the middle of an affordability crisis driven by Donald Trump," said Sen. Elizabeth Warren (D-Mass.), "Trump is killing a plan that lowers student loan costs. It's shameful."
