Core Insights - The Saving for a Valuable Education (SAVE) repayment plan for federal student loans is ending, requiring millions of borrowers to select a new, likely more expensive repayment plan [1][11] Group 1: Transition from SAVE Plan - 7.7 million borrowers will soon need to exit the SAVE plan, which was an income-driven repayment plan initiated by the Biden administration [3] - The Department of Education has not set a specific date for when borrowers must leave the SAVE plan but has advised them to transition to another repayment plan now [3][4] - The Income-Based Repayment (IBR) plan is currently recommended as the most stable option for borrowers transitioning from SAVE, as other income-driven plans will be eliminated after July 1, 2028 [4] Group 2: New Repayment Options - A new income-driven repayment plan, the Repayment Assistance Plan (RAP), will offer lower monthly payments than the IBR plan for some borrowers, but it will not be available until at least July 1, 2026 [5] - Payments for borrowers under the IBR and Pay as You Earn (PAYE) plans will be approximately $100 to $200 more per month compared to the SAVE plan, depending on their income and family size [7][8][11] Group 3: Financial Impact on Borrowers - The median yearly income for a worker with a bachelor's degree is $80,132, and a single borrower with this income would see payments increase by about $100 on IBR and PAYE compared to SAVE [7] - For a borrower with a spouse and two children, monthly payments could increase by $200 on IBR and PAYE compared to SAVE, with ICR payments exceeding $500 [8] - Lower-income borrowers, such as those in early childhood education, would face similar increases, with the RAP plan being a more affordable option, albeit not available until mid-2026 [12][13][14]

Core Insights - The Department of Education has resumed student loan forgiveness for most income-driven repayment plans, but there is no confirmed date for when borrowers will receive their forgiveness [3] - Borrowers eligible for forgiveness in 2025 will not have to pay federal taxes on their discharged loans, provided they take necessary steps before the end of the year [4][5] Group 1: Loan Forgiveness Resumption - The Department of Education is processing tax-free loan discharges for borrowers under Income-Based Repayment, Pay As You Earn, and Income-Contingent Repayment plans [6] - Borrowers under the Saving for a Valuable Education plan are currently unable to receive forgiveness due to ongoing lawsuits [6] Group 2: Tax Implications - Borrowers who qualify for loan forgiveness in 2025 must ensure they take steps to avoid being taxed on their discharged loans, which could result in significant tax liabilities [5] - The temporary tax rule allowing tax-free forgiveness will end on January 1, 2026, creating urgency for borrowers to act [4] Group 3: Verification Steps - Borrowers should verify their repayment plan qualifies for forgiveness and ensure they have made the required number of payments, which is 240 or 300 months depending on the plan [10] - Borrowers can request a transfer of repayment plans through the Federal Student Aid website to ensure tax-free forgiveness [9]