Should I Switch From SAVE to IBR? It Depends

• IBR payments are up to 15% of discretionary income, significantly higher than SAVE’s 5% for undergraduate loans.

• Payments made under SAVE will likely still count toward PSLF and IDR forgiveness, even if SAVE is canceled.

• To switch to IBR, you must show partial financial hardship, which not all student loan borrowers can qualify for.

If you’re on the SAVE Plan, you might feel unsure about what’s next. Ongoing court cases and potential changes under a new administration can be unsettling.

You may be thinking about switching to IBR but have concerns about eligibility, higher payments, or whether you’ll still move closer to forgiveness. Plus, the wait for the one-time account adjustment adds to the uncertainty, leaving you wondering about the best choice.

The answer depends on three things:

• Affordability: Income-Based Repayment payments are typically much higher than under the Saving on a Valuable Education Plan. Make sure you can manage the increased cost.

• Eligibility: To switch, you must prove a partial financial hardship — not everyone qualifies.

• Delays: Even if you apply now, your servicer may not process the application immediately. Most applications are placed in processing forbearance, where PSLF and IBR forgiveness credit accrue, but interest does too—unless you’re already in SAVE.

If SAVE is struck down, applying for IBR can protect your progress. But, delays or errors by your servicer could complicate things. For PSLF borrowers, months in SAVE forbearance don’t count toward forgiveness, making it a time-sensitive decision.

Switching repayment requires balancing these factors with your financial situation and tolerance for uncertainty. There’s no one-size-fits-all answer, but understanding the trade-offs can help you decide.

Related

• SAVE Plan Blocked

• How to Change Your Student Loan Repayment Plan

Changing from SAVE to IBR can feel like a logical move, especially with the SAVE plan litigation and uncertainty about the next administration. But this decision depends heavily on timing, your financial situation, and your forgiveness timeline.

Here’s a breakdown of the pros and cons, along with subtle nuances borrowers should consider:

Pros of Switching

1. Counts Toward Forgiveness During Processing Forbearance: When you apply for an IBR plan, your payments during processing forbearance count toward PSLF and IDR forgiveness. This is helpful if you’re near the end of your forgiveness timeline.

2. Protection Against SAVE Uncertainty: With SAVE under legal review, applying for IBR provides a backup plan if SAVE is canceled or changed.

3. Guaranteed Forgiveness Credit: IBR payments always count toward forgiveness, so you avoid the risk of being stuck in SAVE’s administrative forbearance.

Cons of Switching

1. Higher Monthly Payments: IBR payments are calculated at 15% of discretionary income, compared to SAVE’s 5% for undergraduate loans. This can result in payments doubling—or even tripling—for some borrowers.

2. Eligibility Requirements: Switching to IBR isn’t automatic; you must demonstrate a partial financial hardship (PFH) to qualify. Borrowers with higher incomes or lower loan balances may not meet this threshold.

3. Servicer Delays and Documentation Issues: Even if you submit an IBR application, servicers aren’t processing them right now due to restrictions from the Department of Education. Without intervention, they may keep you in the SAVE forbearance, requiring a proactive call to request processing forbearance.

4. Interest Accrual: If you’re not already in SAVE, processing forbearance builds up interest, potentially adding to your loan balance over time.

Related: Partial Financial Hardship Calculator

Should You Switch or Wait?

If you’re close to forgiveness—within 12 to 24 months—switching to IBR and requesting processing forbearance can help. This ensures your payments count right away and avoids delays from SAVE’s legal challenges. Just make sure to confirm with your servicer that you’re in processing forbearance, not stuck in SAVE’s administrative forbearance.

On the other hand, if you’re years away from forgiveness—say 5, 10, or even 15 years—it may be wiser to wait. Staying on SAVE offers lower payments and interest subsidies, which can provide significant financial relief over time. For these borrowers, the urgency to act is far less critical.

Step 1: Decide How to Apply

You have two ways to request a repayment plan change:

• Online Application: Head to StudentAid.gov. Your application will be automatically forwarded to your loan servicer. This is convenient, but the system has quirks that can lead to errors—especially if your income or marital status is unusual.

• Paper Application: Download the IDR application and complete it manually. This method gives you more control, particularly if your income includes bonuses, commissions, or other irregular amounts. You can attach documentation like pay stubs or employer statements that better reflect your current financial situation to ensure a lower calculated payment.

Step 2: Gather the Right Income Documentation

The key to a successful application is using income documentation that minimizes your monthly student loan payment. Options include:

• Pay Stubs: Ideal if your regular paycheck is lower than the annualized income reported on your tax return.

• Employer Letters: Useful if you’ve recently changed jobs or your hours have been reduced.

• Tax Returns: Only use these if your reported Adjusted Gross Income (AGI) accurately reflects your day-to-day earnings. Avoid using this option if your income includes one-time anomalies like stock sales, bonuses, or dividends.

Step 3: Submit the Application

You can submit your application either online or through mailing.

• Online Application: Follow the prompts on StudentAid.gov and submit directly. Check your servicer’s portal for updates to ensure it was received.

• Paper Application: You can upload forms through your servicer’s online portal, which is faster and provides a record of submission. Alternatively, you can fax or mail your application, but these methods are slower and increase the risk of lost paperwork—use them only as a last resort and keep copies of everything.

Step 4: Confirm Receipt and Monitor Progress

Log into your servicer’s portal within a few days to check the “Submitted Forms” section or look for application updates. If no update appears, call your servicer to confirm receipt and ensure your application is in processing.

Keep detailed records of all interactions, including dates, times, and representatives’ names.

Step 5: Ask for Processing Forbearance

After submitting your application, ask your loan servicer for processing forbearance. This allows your loans to count toward forgiveness during the processing time (usually up to 60 days), even though interest will build up. If your servicer puts you in SAVE’s administrative forbearance by mistake, reach out to fix it—only processing forbearance counts for PSLF or IBR forgiveness.

Delays are common due to backlogs and SAVE’s legal issues. Keep checking in with your servicer to make sure your request is handled properly and nothing gets overlooked.

Step 6: Handle Servicer Errors

Mistakes are common when servicers process applications under pressure. If you encounter issues:

• Document Everything: Note submission dates, confirmation numbers, and communications.

• Resubmit if Necessary: If your servicer claims not to have received your application or supporting documents, don’t hesitate to resubmit.

• Escalate if Needed: File a complaint with the Federal Student Aid Ombudsman Group if issues persist.

Can You Cancel Your Application?

Yes, you can cancel your application if you decide to stay on SAVE after applying to switch to IBR. For example, if the ongoing legal issues are resolved in a way that benefits SAVE borrowers, you might prefer to stay on that plan.

Simply call your loan servicer and ask to cancel the application before it’s processed. Timing is key—reach out as soon as you change your mind to avoid complications or delays in your repayment plan.

No one knows for sure what will happen if SAVE goes away. We’re all taking our best guess, but here are some likely issues and concerns to consider:

1. Forgiveness Progress is Likely to Be Preserved: Payments you’ve made under SAVE will likely still count toward PSLF and IDR forgiveness, even if SAVE is removed. Courts usually don’t take away progress borrowers have already earned, so you shouldn’t lose the credits you’ve built up.

2. IBR Offers Stability, But Costs More: Since IBR is set by Congress, it’s more secure from legal issues than SAVE. But, IBR payments are higher—up to 15% of your discretionary income compared to SAVE’s 5% for undergraduate loans. This means IBR could cost you more each month.

3. Automatic Transitions May Be Inconsistent: If SAVE is canceled, you probably won’t be automatically moved to Revised Pay As You Earn (REPAYE). You’ll need to pick a new plan or be placed in another option like IBR or Standard repayment. Your student loan forgiveness progress should carry over, but benefits like SAVE’s lower payments and interest subsidies might go away, and your payment could increase.

4. Returning to SAVE May Not Be an Option: If you switch to IBR and SAVE remains for some borrowers, you may not be able to return, depending on the final litigation outcome. If SAVE is fully eliminated, other repayment options will likely be limited to PAYE plan (if eligible), ICR, or standard repayment plans, which are often less favorable.

If you’re close to forgiveness—within 12-24 months—switching to IBR now might make sense, even with the higher monthly payments. It’s a short window to make those payments, and the payoff of being debt-free and done with the system can feel worth it.

For borrowers further from forgiveness, though, it’s a much harder ask. Signing up for years of higher payments—especially with the rising costs of housing, groceries, and everything else—can feel like too much to take on.

Instead, staying in SAVE forbearance means you’re effectively on an interest-free, no-payments-due pause while the government sorts out what happens next. You’re not making progress toward forgiveness, but there’s also no financial penalty in terms of interest or payments being required.

If that’s you, it might make more sense to wait things out while litigation is resolved. Either way, keep an eye on updates and make sure you’re ready to adapt if the situation changes.

Family Size Impacts Payments

Your family size plays a big role in how much you’ll pay under plans like IBR. A larger family means a higher income limit before your payments go up. Be sure to report your family size accurately when applying and recertify it each year to keep your payments affordable.

Loan Consolidation Considerations

If you’ve consolidated your loans into a Direct Consolidation Loan, this can impact your eligibility for certain repayment plans.

• Eligibility Restrictions: For example, consolidated Parent PLUS Loans only qualify for Income-Contingent Repayment, not IBR.

• Impact on PSLF Progress: Consolidation can also affect your progress toward Public Service Loan Forgiveness. The Biden administration’s one-time account adjustment allowed borrowers to bring retroactive credit forward, and they introduced programs like the PSLF buyback and weighted credit averaging. But if you consolidate now, it’s unclear whether these benefits would remain intact under a different administration, such as Trump’s.

• Spouse’s Income: As with SAVE, your IBR payments will be based on both your income and your spouse’s income if you filed taxes jointly and their income is accessible. But if you filed separately or cannot reasonably access their income, your payments may be calculated based solely on your own income. Learn more in this guide.

This uncertainty makes it critical to weigh your options carefully before consolidating.

Unpaid Interest and Forgiveness

If you’ve been on SAVE or in forbearance, unpaid interest may have added up. Under SAVE, this interest doesn’t compound, but switching to IBR means interest will start growing again. This can increase your loan balance over time, especially if you owe a large principal balance, so factor it into your decision.

Deciding whether to switch from SAVE to IBR can feel overwhelming, but you don’t have to figure it out alone. Our student loan experts are here to help you evaluate your unique situation—whether you’re juggling rising interest rates, balancing federal loans, or trying to decide between different repayment plans.

With the right guidance, you can make a confident choice that minimizes stress and maximizes progress toward paying off your student loan balance.

Book a consultation with one of our experts today, and take the next step toward financial freedom.

Related reading:

• IBR Income Limits Explained

• Disadvantages of Income-Based Repayment

• Does Sallie Mae Offer Income-Based Repayment?

• How to Get Income-Based Repayment for Parent PLUS Loans

• Private Student Loan Income-Based Repayment Isn’t a Thing