Should I Switch From SAVE to IBR? It Depends

• SAVE caps payments at 5% of discretionary income for undergraduate loans, while IBR can go as high as 15%. IBR could triple your payment, making it unaffordable for most borrowers.

• Payments made under SAVE will still count toward PSLF and IDR forgiveness if SAVE is canceled. Courts historically preserve borrower progress, so you won’t lose the credits you’ve already earned.

• Switching to IBR requires proving partial financial hardship, which you may not be able to do if your income is high and your balance is low.

If you’re on the SAVE Plan, you’re probably feeling stuck. The ongoing court case and uncertainty about a new administration have made everything murkier.

Switching to Income-Based Repayment (IBR) might seem like a way to protect your progress, but it’s not an easy decision. Here’s what you need to know:

• Affordability: IBR payments are often much higher than SAVE payments. Can you handle the extra cost?

• Eligibility: You’ll need to prove a partial financial hardship to qualify—some borrowers won’t.

• Delays: Switching takes time. During processing forbearance, you’ll earn PSLF and IBR credit, but interest will pile up—unless you’re already on SAVE.

For PSLF borrowers, staying in SAVE forbearance doesn’t help you move closer to forgiveness. If SAVE is struck down, switching to IBR might help you stay on track, but servicer delays could throw a wrench in your plans.

There’s no one-size-fits-all answer. It’s about figuring out what works for your budget and how much uncertainty you can handle.

Related

• SAVE Plan Blocked

• How to Change Your Student Loan Repayment Plan

Switching from SAVE to IBR might seem like the safe move, especially with SAVE tied up in court and a new administration coming in. But whether it’s the right choice depends on your finances, forgiveness timeline, and how much uncertainty you can handle.

Here’s what you need to weigh:

Pros of Switching

• Your payments count during processing forbearance. If you apply for IBR, your servicer might put you in processing forbearance while they review your application. This forbearance lasts up to 60 days and counts toward Public Service Loan Forgiveness and Income-Driven Repayment forgiveness. Servicers are processing applications again after months of delays, so things are moving—but still slowly.

• IBR protects you if SAVE is canceled. SAVE is still tied up in court. Switching to IBR gives you a backup plan. Payments under IBR always count toward forgiveness, unlike SAVE’s general forbearance, which only counts if the courts approve it.

• IBR offers stability. With SAVE’s future up in the air, IBR’s rules are clear and reliable. It’s the only Income-Driven Repayment plan that’s part of federal law. The other plans—PAYE, ICR, REPAYE, and SAVE—were created by the Department of Education and could be more vulnerable to legal challenges. If you want a repayment plan you can rely on, IBR might be the better choice.

Cons of Switching

• IBR payments are higher. At 15% of your income, IBR payments can be double or triple SAVE’s 5% for undergrad loans. This makes IBR a lot more expensive, especially if you have graduate loans or a higher income.

• You need to prove financial hardship. To get IBR, you’ll need to show partial financial hardship. If your income is too high or your loan balance is too low, you might not qualify.

• Processing delays can still slow things down. Servicers are working through months of backlogged applications. If you apply now, you might wait a while to get enrolled. And not all servicers are following the rules—some haven’t been putting borrowers in processing forbearance, even though they’re supposed to.

• Interest piles up during processing forbearance. Processing forbearance means no payments while your application is reviewed, but interest doesn’t stop. If it takes a while to process your application, your balance could grow—and that adds to what you’ll owe later.

Deciding whether to switch from the SAVE Plan to IBR isn’t easy. The right choice depends on how close you are to loan forgiveness, your financial situation, and how much risk you’re comfortable taking on. Let’s break it down so you can make the best decision for your situation.

If You’re Close to Forgiveness (12–24 months)

Switching to IBR might make sense if you’re near the finish line, but the higher payments could strain your budget. Here’s what to consider:

• Switching ensures forgiveness progress counts. Switching to IBR means time in processing forbearance counts toward PSLF and IDR forgiveness, even with SAVE caught up in court delays.

• IBR protects you from SAVE’s uncertainty. With SAVE in legal limbo, IBR provides stability. Your payments will always count toward forgiveness, no matter what happens with the courts.

• Higher payments may strain your budget. IBR payment amounts are 15% of your income—compared to SAVE’s 5% for undergrad loans. If you’re just months away, the extra cost might be worth it. But if you’re 1–2 years out, those higher payments could stretch your finances too thin.

• You might not need to switch. Public service workers can use the PSLF Buyback Program to retroactively count missed months, including time spent in SAVE forbearance. If you qualify, this program could let you stay on SAVE while still progressing toward forgiveness. To use the buyback, you’ll need to prove public service employment for the missed months, have an outstanding loan balance, and be close to reaching 120 total payments.

Example: Let’s say you’ve been making PSLF-qualifying payments for 8 years and are 18 months from forgiveness. Switching to IBR guarantees those final payments count, even if SAVE is struck down. But if your payments double, consider whether that financial strain is manageable over the next year and a half.

If You’re Years Away from Forgiveness (5+ years)

If forgiveness is still far off, sticking with SAVE is probably your best bet. Here’s why:

• SAVE keeps payments low. At 5% of your income for undergrad loans, SAVE’s payments are much lower than IBR’s 15%. That keeps more money in your pocket.

• Interest subsidies stop your balance from growing. SAVE covers unpaid interest, so your loan balance won’t grow even if your payments are low.

• You have time to see how things shake out. With years left before forgiveness, staying on SAVE gives you the flexibility to wait out the court rulings and see what happens.

Example: Imagine you’re 3 years into an IDR plan with $60,000 in loans and still 20 years of payments to go before you reach the student loan forgiveness finish line.

Switching to the IBR plan could double your payments without getting you closer to the finish line. Sticking with SAVE keeps your payments manageable and gives you time to adjust if needed

Key Questions to Ask Yourself

To decide if switching is right for you, answer these questions:

1. How close am I to forgiveness? If you’re within two years, switching to IBR might make sense—but only if you can handle the higher payments. If not, SAVE’s lower payments and subsidies are more valuable.

2. Can I afford higher payments? IBR payments can be 2x–3x higher than SAVE payments. Make sure the increase fits your budget.

3. Am I comfortable waiting? If uncertainty about SAVE’s future is causing stress, switching to IBR provides stability.

Switching from SAVE to IBR might feel overwhelming, but it doesn’t have to be. Breaking it into steps makes the process easier and helps you avoid common mistakes.

Here’s how to handle it.

Step 1: Decide How to Apply

You have two ways to request a repayment plan change:

• Online Application: Visit StudentAid.gov. This method is quick and convenient, but the system can sometimes misinterpret irregular income or marital status, so double-check your inputs.

• Paper Application: Download the IDR application to manually fill out and submit. This method gives you more control over your reported income and allows you to attach supporting documentation, like pay stubs or employer letters.

Step 2: Gather the Right Income Documentation

The key to a successful application is submitting income documentation that minimizes your calculated payment. Here are your options:

• Pay Stubs: Use these if your paycheck reflects lower income than what’s on your tax return.

• Employer Letters: Ideal if you’ve recently had a pay cut, changed jobs, or reduced your hours.

• Tax Returns: Use these only if your AGI (Adjusted Gross Income) accurately reflects your current income and excludes one-time anomalies like bonuses or stock sales.

Pro Tip: Irregular income? Include additional documentation, like pay stubs or an employer statement, to explain your situation and reduce your calculated payment.

Step 3: Submit the Application

Choose your preferred method:

• Online Submission: Submit your application directly on StudentAid.gov and monitor updates through your servicer’s portal.

• Paper Submission: Upload forms to your servicer’s portal for faster processing, or mail them as a backup option (keep copies of everything!).

Step 4: Confirm Receipt and Monitor Progress

Once your application is submitted:

• Log into your servicer’s portal to check the “Submitted Forms” section within a few days.

• If there’s no update, call your servicer to confirm receipt and ensure your application is in processing.

• Keep detailed records of all interactions, including dates, times, and representative names.

Step 5: Ask for Processing Forbearance

After submitting your application, request processing forbearance from your servicer. This ensures your loans count toward PSLF or IDR forgiveness while your application is being processed (up to 60 days) for enrollment.

• Important: If your servicer places you in SAVE’s administrative forbearance by mistake, reach out immediately to correct it.

• Processing times can vary due to backlogs, so stay proactive and check in regularly.

Step 6: Handle Servicer Errors

Mistakes happen, but you have options:

• Document Everything: Keep notes on submission dates, confirmation numbers, and all communications.

• Resubmit if Needed: If your servicer claims not to have received your application or documents, resubmit promptly.

• Escalate if Necessary: File a complaint with the Federal Student Aid Ombudsman Group if persistent issues arise.

Remember, you have the tools to get through this process. Stay organized, keep advocating for yourself, and reach out for help if needed.

Yes, you can cancel your application if you decide to stick with SAVE after applying to switch to IBR. For example, if the legal challenges are resolved in a way that favors SAVE borrowers, you might want to stay on that plan.

Call your loan servicer and cancel the application before it’s processed. Act fast—reaching out quickly helps avoid complications or delays with your repayment plan.

Submitting an IBR application doesn’t lock you in. You can change your mind if new information or circumstances make SAVE the better option for you.

No one knows for sure what will happen if SAVE goes away, but understanding the potential outcomes can help you feel more prepared.

Here’s what you should know:

• Your forgiveness progress is likely safe. Payments made under SAVE will likely still count toward PSLF and IDR forgiveness. Courts rarely revoke credits borrowers have already earned, so your progress should remain intact.

• IBR offers stability but costs more. Since IBR is established by Congress, it’s secure from legal challenges. But IBR payments are up to 15% of discretionary income compared to SAVE’s 5% for undergraduate loans. This stability comes at a higher financial cost.

• Automatic transitions may not happen. If SAVE is canceled, you probably won’t be automatically moved to another repayment plan like REPAYE. You’ll need to choose a new plan, and benefits like SAVE’s interest subsidies and lower payments may disappear. Forgiveness progress should carry over, but your monthly payment could increase.

• Returning to SAVE may not be possible. If you switch to IBR and SAVE remains available for some borrowers, returning might not be an option. Depending on the litigation outcome, your choices could be limited to PAYE, ICR, or standard repayment plans, which often have higher payments or less favorable terms.

Understanding these possibilities can guide your decision. If stability is your top priority, IBR might make sense despite its higher cost. If affordability remains critical, staying on SAVE until more is clear could be the better move.

When deciding whether to switch to IBR, factors like family size, loan consolidation, and interest accrual can significantly impact your payments and eligibility. Here’s how these details play into your decision:

Family Size and Payments

Your family size directly affects how much you’ll pay under IBR. A larger family raises the income threshold before your payments increase. Reporting this accurately can help keep your payments affordable.

Tip: Recertify your family size every year to ensure you’re not overpaying.

Loan Consolidation

Consolidating loans into a Direct Consolidation Loan can change your repayment options and forgiveness progress:

• Consolidated Parent PLUS Loans only qualify for Income-Contingent Repayment (ICR), not IBR.

• Consolidation resets PSLF payment counts unless retroactive credit applies under existing rules like the one-time account adjustment. But future policy changes could affect these benefits.

• Evaluating consolidation is especially critical if policies shift under a new administration.

Spouse’s Income

If you file taxes jointly, your IBR payments will be based on both your income and your spouse’s income. Filing separately or demonstrating that you can’t reasonably access their income may allow payments to be based solely on your earnings.

Tip: Review your tax filing strategy to ensure it aligns with your repayment goals.

Unpaid Interest

Switching to IBR may cause your loan balance to grow due to accumulating interest:

• Under SAVE, unpaid interest doesn’t compound, keeping your balance stable.

• With IBR, interest starts growing again, which can increase your loan balance over time.

Tip: Consider how unpaid interest might affect your financial situation, especially if you have a large principal balance.

The future of Biden’s Saving on a Valuable Education (SAVE) Plan is uncertain. Courts may strike it down, and an incoming Trump administration has shown little interest in keeping it alive or replacing it with the Revised Pay As You Earn Plan or a different repayment plan altogether. This leaves you and millions more federal student loan borrowers facing instability and tough decisions.

If you’re thinking about switching from SAVE to IBR, your goal is likely to minimize costs while working toward forgiveness. SAVE offers the lowest payments and interest subsidies for now, but exploring IBR may be necessary as its future remains unclear. The decision depends on your financial situation, timeline, and tolerance for uncertainty.

Student loans are complex, but getting clarity doesn’t have to be.

Book a call with a student loan expert today.

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