Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
We are now past the July 1, 2026 date where the Working Families Tax Cuts Act takes effect which means a lot has changed for the federal student loan repayment system.
The notices are the result of the Department of Education (“ED”) ending the SAVE plan, a Biden-era income driven repayment program that has been bogged down in lawsuits over the past several years. Borrowers who have remained on a SAVE forbearance where no payment was due will be in for quite a shock when new payment notices are issued.
There are still around six million borrowers on a SAVE forbearance. Most servicers started sending out 90 day notice letters starting July 1 – but Nelnet is reporting that it will not be able to send these notice letters until March 2027. If that is your client, there is the possibility that some people will be able to stay in a SAVE forbearance until the summer of 2027.
What does this 90 day notice mean? Basically, a borrower has 90 days to choose a repayment plan. For loans dated prior to July 1, 2026, the old Income Driven Plans will remain available for two additional years. If no plan is chosen, ED will automatically place the loan(s) into the Tiered Standard Repayment Plan and the monthly payment may skyrocket, depending upon how much is owed.
The loans will not automatically remain in forbearance. When choosing a repayment plan, do not assume the servicer will make the best choice. Doing nothing is a short term solution – defaulting on a federal student loan will result in 25% added to the balance, bad credit, tax refund seizure and mandatory wage garnishment or social security offset.
What should you do now? Log into Studentaid.gov, confirm your contact information, identify your deadline, and compare your options using the Repayment Calculator.
