More than 300,000 federal student loan borrowers have exited the defunct SAVE repayment plan in recent weeks, but millions remain at risk as deadlines approach.

Nicholas Kent, a top official at the U.S. Department of Education, told CNBC on Thursday that borrowers still enrolled in the Biden-era Saving on a Valuable Education, or SAVE, plan could soon face significantly higher monthly payments if they fail to switch to a new repayment option.

Kent is a senior Trump administration official who helps oversee federal student aid policy and the government's student loan system.

"It's a problem for borrowers," Kent said. "They're not recognizing the benefit of making their payments."

He also delivered a blunt message: "SAVE borrowers have to move."

Deadline Pressure

The Biden administration launched SAVE in 2023 as a low-cost repayment plan designed to reduce monthly student loan payments. However, Republican-led legal challenges halted the program, and a federal appeals court ended it earlier this year.

The Trump administration is now transitioning borrowers out of SAVE. Borrowers are expected to receive notices from loan servicers starting around July 1 and will generally have about 90 days to choose a new repayment plan.

Kent said deadlines may vary throughout the summer to avoid overwhelming loan servicers.

Borrowers who fail to choose a new plan could be automatically moved into the Standard Repayment Plan or the Tiered Standard Repayment Plan, both of which may carry significantly higher fixed monthly payments.

That may create another bottleneck. More than 530,000 borrowers were already waiting for repayment-plan applications to be processed as of late April.

Higher education expert Mark Kantrowitz warned that borrowers who remain in SAVE will continue to accumulate interest while making no progress toward loan forgiveness.

He estimates the typical SAVE borrower has about $57,000 in debt at a 6.7% interest rate, meaning balances may have already grown by more than $2,500 since interest resumed last year.

Default Risks Rise

Borrowers transitioning out of SAVE may soon face an even tougher repayment landscape.

Under President Donald Trump's One Big Beautiful Bill Act, borrowers who take out new federal loans or consolidate existing debt after July 1 could lose access to several flexible repayment and loan-forgiveness options.

The financial strain is already visible. Federal Reserve Bank of New York data showed delinquent student debt climbed to a record $171.4 billion in the first quarter. Separate New York Fed data showed 3.6 million borrowers were already in default, with borrowers aged 50 and older facing the highest risk.

Meanwhile, Sen. Elizabeth Warren (D-Mass.) and more than 60 Democratic lawmakers have urged the Trump administration to provide relief for eligible borrowers and delay collections on defaulted loans, warning that recent policy changes could push more Americans into financial distress.

Mark Kantrowitz warned that borrowers who fail to adjust to higher payments under standard repayment plans could eventually fall into delinquency and default, increasing the risk of wage garnishment and credit damage.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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