How Do I Change My Student Loan Repayment Plan?

• You can change your federal student loan repayment plan at any time for free.

• Your options may be limited if you’re affected by the recent SAVE plan block.

• You need to submit a paper application due to the temporary removal of online forms.

• Changing plans can affect your monthly payment amount and loan forgiveness timeline.

• You should reassess your repayment plan annually or when your financial situation changes.

Changing your federal student loan repayment plan is currently more complex due to recent legal challenges. Here’s what you need to know:

Federal courts have blocked the Saving on a Valuable Education Plan indefinitely. Online applications for Income-Driven Repayment plans are unavailable. You can still apply to change to a different repayment plan by submitting a paper form to your student loan servicer. But servicers aren’t processing them immediately. Instead, they’re putting the applications on a processing hold until they get permission to move forward from the Education Department.

To change your plan:

1. Download the IDR application form from StudentAid.gov.

2. Complete the form and mail it to your loan servicer.

3. Expect delays in processing. Loan servicers are queuing applications until they receive further direction from the Department of Education.

This process applies whether you’re on the SAVE plan or considering switching to a different IDR plan, such as income-based repayment or income-contingent repayment.

Your repayment options largely depend on whether you’re currently enrolled in the SAVE plan or not.

If you’re enrolled in SAVE, you’re automatically placed in administrative forbearance. This means you don’t owe payments and won’t accrue interest for now. But you won’t make progress toward Public Service Loan Forgiveness or Income-Driven Repayment forgiveness during this time.

You can choose to leave SAVE and switch to another IDR plan: Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR). These plans allow you to continue making progress toward forgiveness. But your monthly payments might be higher than they were under SAVE. This is because SAVE used 225% of the poverty guidelines to calculate discretionary income, while other IDR plans use 150%.

Another option is to switch to a Standard, Extended, or Graduated repayment plan. These plans offer fixed payment plans based on your remaining balance, interest rate, and repayment period. But these plans typically don’t qualify for PSLF or IDR forgiveness. So if you’re pursuing loan forgiveness, these plans are generally not recommended.

Before deciding, use the Loan Simulator to compare your estimated payments under each plan. Consider your ability to afford monthly payments and your long-term repayment strategy.

Also, keep in mind that switching plans today will force you to recertify your family size and income. Depending on what you reported when you last submitted an IDR application, changes to either of those items can increase your payments.

The SAVE plan block has implications that extend beyond just those enrolled in SAVE:

1. Broader IDR Concerns: The court’s ruling has cast doubt on student loan forgiveness under other IDR plans. While IBR, ICR, and PAYE aren’t directly challenged, their legal foundation is similar to SAVE’s. This uncertainty could affect long-term forgiveness prospects for many borrowers.

2. PSLF Complications: The court order appears to prohibit loan forgiveness for SAVE enrollees under any program, including the PSLF Program. This broad interpretation could impact borrowers pursuing forgiveness through various means, even those unrelated to SAVE.

3. Potential Ripple Effects: If the legal challenges succeed, it could undermine the 30-year consensus on IDR forgiveness, affecting millions of borrowers counting on relief after 20 or 25 years of payments.

4. PSLF Buyback Option: For PSLF-eligible borrowers, the “buyback” option remains available. This option can help you if you have qualifying employment and buying back forbearance months that would complete your 120 qualifying payments.

5. Decision-Making Challenges: With the future of IDR plans in question, choosing the best repayment strategy has become more complex. Borrowers must weigh the benefits of current payment relief against potential long-term forgiveness implications.

Given these uncertainties, consider the following actions:

• If pursuing PSLF: Explore switching to an available IDR plan to continue making qualifying payments, or investigate the buyback option if you’re close to 120 payments.

• If on a long-term IDR forgiveness track: Stay informed about legal developments and consider making voluntary payments to maintain progress, even during forbearance.

• If struggling financially: Take advantage of the current forbearance, but prepare for potential changes by exploring other IDR options.

• For all borrowers: Stay vigilant about policy updates and be prepared to reassess your repayment strategy as the situation evolves.

Given the current uncertainty in student loan repayment options, carefully weigh these factors before changing your plan:

1. Long-term forgiveness goals: If you’re pursuing PSLF or IDR Plan forgiveness, switching to a non-IDR plan could derail your progress. Consider how a plan change might affect your forgiveness timeline.

2. Monthly payment amount: Compare your potential payments under different plans. While SAVE offered the lowest payments for many, other IDR plans might still be more affordable than standard repayment options.

3. Total cost over time: Lower monthly payments often mean paying more in interest over the life of the loan. Use the Loan Simulator on StudentAid.gov to estimate your total costs under different scenarios.

4. Job security and income prospects: If your income is likely to increase significantly, a plan with payments capped at the 10-year Standard plan amount (like PAYE) might be beneficial.

5. Loan types: Some repayment plans are only available for certain loan types. For example, Parent PLUS Loans aren’t eligible for any IDR plan unless they are first consolidated into a Direct Consolidation Loan. And even then, they’re only eligible for the ICR Plan unless the borrower uses the double consolidation loophole.

6. Processing times: Currently, there are significant delays in processing plan changes. Be prepared for a wait and consider how this might affect your immediate financial situation.

7. Potential policy changes: The student loan landscape is rapidly evolving. Consider how flexible you need to be if new options become available or current options change.

Private student loans have different rules for changing repayment plans:

• Private lenders rarely offer flexible repayment options.

• Changing private loan terms usually requires refinancing with a new loan.

• Refinancing can lower your interest rate but may affect your credit score.

To refinance private student loans:

1. Compare offers from multiple lenders.

2. Check eligibility requirements, including credit score and income.

3. Be aware that refinancing federal loans into private loans eliminates federal benefits.

Your options depend on your lender’s policies and your financial situation. Consult your lender before changing your private student loan repayment plan.

You can change your student loan repayment plan by submitting the appropriate form to your servicer. Here’s how:

1. For Income-Driven Repayment Plans: Download the IDR Request Form and then complete the form and include the required income documentation.

2. For Standard, Extended, or Graduated Repayment Plans: Download the the Repayment Plan Request form. You don’t need to include income documentation. Note: These plans may extend the loan term or repayment term. This means you may end up paying more interest over the life of the loan.

3. Submit your completed form: You can mail it to your servicer’s address or upload it to your servicer’s online account if available.

If you don’t know your loan servicer, check the Federal Student Aid website, StudentAid.gov. This site will provide your loan balance, loan types, and servicer information.

Due to the SAVE Plan litigation, processing times for IDR plan changes are unclear. But changing to the Standard Repayment Plan, Graduated Repayment Plan, or Extended Repayment Plan should happen within a few weeks.

Changing your student loan repayment plan can significantly impact your finances. Here’s what you need to know:

• Submit the appropriate form to your loan servicer to change plans.

• IDR plans are best for loan forgiveness despite processing delays.

• SAVE plan enrollees are in administrative forbearance due to legal challenges.

• Consider your financial goals, budget, and forgiveness eligibility when choosing a plan.

• Policy changes may affect your options, so stay informed.