Your Student Loans Are Changing July 1

On July 1 your student loans change. Not “might change.” Change. The U.S. Department of Education’s announcement of next steps for SAVE borrowers put a date on the wall, and the date is twelve days from when this post goes up. Roughly seven million people are in the SAVE forbearance right now and most of them have no idea that a 90-day clock is about to start.

This is the conversation I want to have before that clock starts running. Not the political fight about how we got here. The practical question of what you do this week so a default judgment doesn’t choose your repayment plan for you.

If you’re already paying on your loans, this is for you. If you’re a May 2026 graduate who hasn’t made a payment yet, this is for you. If you’re about to be a college freshman, this is especially for you — because the rules you’ll borrow under are not the rules your older cousin borrowed under, and the difference is real money.

The short version

If you only read the table, you’ve got the post.

What’s true	What it means for you
SAVE was terminated by the courts in March 2026 — July 1 is when your 90-day clock to pick a new plan officially starts (Department of Education)	The plan most current borrowers were betting on is gone. The forbearance ends with it.
Borrowers get 90 days after July 1 to pick a new plan or get auto-enrolled into Standard (higher payments) (The College Investor)	Doing nothing is a choice. It’s just usually the most expensive one.
The new Repayment Assistance Plan (RAP): minimum $10/month, capped at ~10% of income, 30-year forgiveness, government covers leftover interest (NerdWallet)	The $0 payment era is over. So is runaway interest, if you stay current.
Borrowers with pre–July 1 loans can stay on legacy IDR plans — but only if they take no new loans and do not consolidate after July 1 (Student Loan Borrowers Assistance)	One more dollar of borrowing or one consolidation and your old, better terms vanish. Forever.
Incoming freshmen are projected to graduate with an average of $43,000 in debt (CNBC, April 2026) — up from $40,000 last year	The rules tighten the year you sign. Borrowing in 2026 isn’t borrowing in 2024.

The thing that matters most isn’t in the table. It’s what you do in the next 90 days.

What’s actually ending on July 1

SAVE was the income-driven repayment plan the previous administration rolled out in 2023. It was the most generous IDR plan in the program’s history. Lower payments. Faster forgiveness. A $0 monthly payment for a lot of low-income borrowers. After a long court fight, it’s done. The federal courts ruled the Department didn’t have the authority to set those terms, and the One Big Beautiful Bill Act finished it off legislatively.

Here’s what July 1 actually looks like on your loans, in order:

July 1, 2026 — The 90-day borrower transition window opens. Servicers begin sending plan-selection notices.
August 1, 2026 — Interest, which has been frozen during the forbearance, starts accruing again on SAVE balances.
September 30, 2026 — End of the 90-day window. If you haven’t picked a new plan, the auto-enrollment kicks in.
October 1, 2026 — Auto-enrolled payments under Standard (or Tiered Standard) begin.

If your monthly was $0 under SAVE, you may go from $0 to several hundred dollars overnight. That is the move you want to see coming, not the one you find out about when the autopay hits.

The four plans you’ll actually be picking from

After July 1, your menu shrinks. Here’s the realistic shortlist most borrowers are choosing between:

Income-Based Repayment (IBR) — the surviving legacy income-driven plan. Payments are capped at 10–15% of discretionary income (depending on when you borrowed), with forgiveness at 20 or 25 years.
Standard Repayment — fixed payment over 10 years. Highest monthly, lowest total interest, no forgiveness.
Graduated Repayment — payments start lower and step up every two years over 10 years. Higher total cost than Standard.
Repayment Assistance Plan (RAP) — the new one. Starts July 1. Income-based with a $10 floor, 30-year forgiveness, an interest subsidy on top of your payment.

If you’re hoping to qualify for Public Service Loan Forgiveness (PSLF), pay attention to which plans count toward that. Standard and IBR do. RAP is being rolled in. Graduated, mostly does not. Check the official rules on studentaid.gov before you pick — not a TikTok summary, not a screenshot from your group chat.

What RAP actually is, in plain English

If you take new loans, this is the plan you’ll be living inside of for most of your twenties.

The Repayment Assistance Plan sets your payment as a sliding percentage of your income, capped at roughly 10% for higher earners. Minimum payment is $10 a month. Not zero. There is no $0 RAP. Even if you’re broke. Even if you’re between jobs. Even if you’re a graduate student making nothing — $10 still hits the account each month, and if you don’t have it, you’re delinquent.

The trade for that floor is real, though. Two big features.

First, 30-year forgiveness. That’s longer than the 20- or 25-year forgiveness on the old IDR plans. It’s a slower road to the finish line.

Second (and this is the part people are sleeping on): the government covers any remaining interest after your monthly payment is applied. Translation: as long as you make your full RAP payment, your balance cannot grow. The interest doesn’t snowball on top of your principal the way it used to. For decades, the cruelty of IDR plans was that low-income borrowers were making payments and watching their balance get bigger. RAP closes that door. If you pay, you make progress. Period.

That’s a real protection. It’s not as generous as SAVE was. It is materially better than the IDR plans that existed before 2023.

The grandfather clause nobody is explaining well

This is the part of the post I want you to read twice if you have any loans at all right now.

If your loans existed before July 1, 2026, you have the right to stay on IBR (the only legacy IDR plan still accepting new enrollees). You do not have to move to RAP. The Department’s own guidance on this is clear: pre-July loans keep the old menu. Note that PAYE and ICR stopped accepting new enrollment on July 1, 2026 and are being fully sunset by July 1, 2028 — so if you’re transitioning out of SAVE, IBR is the legacy IDR option available to you.

But the grandfather clause has a trap door. Two specific actions blow it up.

Taking out a new federal student loan after July 1, 2026. Going back for a master’s? One more semester of grad school? Picking up a parent PLUS loan for a sibling? Any of those resets you to the new rules for all your loans, not just the new one.
Consolidating your federal loans after July 1, 2026. A federal Direct Consolidation Loan creates a new loan with a new disbursement date. That new date is after July 1. The grandfather is gone.

I want you to read that sentence again, because the consolidation one catches people. Plenty of borrowers consolidate without realizing it cuts their options. Servicers will sometimes recommend consolidation as a way to “simplify” things. After July 1, that simplification could cost you the right to be on IBR for the next 25 years.

If you’re sitting on pre–July loans and someone — a servicer rep, a financial influencer, a well-meaning friend — suggests consolidating, slow down. Ask: does this consolidation push my loans out of the grandfather clause? Get the answer in writing before you sign anything. This is one of those decisions where the right move and the easy move are not the same move.

If you graduated in May 2026

You’re in a specific window and the rules are about to ratchet around you.

Your first payment isn’t due yet. The standard six-month grace period puts your first bill somewhere in November or December. That part hasn’t changed. What has changed: interest is already accruing on your unsubsidized loans during that grace period. It always has, technically, but the SAVE forbearance was masking it for borrowers who enrolled early. With SAVE gone, the masking is gone too.

Here’s what that means in practice. If you have $30,000 in unsubsidized federal loans at, say, 6.5% interest, you’re accruing about $163 a month during the grace period. By the time your first bill hits in November or December, you’ve added roughly $1,000 in interest to your balance before you’ve made a single payment. That interest will capitalize — get added to your principal — at the end of the grace period, which means future interest is calculated on the bigger number.

You have two reasonable moves.

One: make optional interest-only payments during the grace period. They’re small. They protect your starting balance. Most servicers let you do it through their portal in three clicks.

Two: pick your post-grace repayment plan now, not in November. Log into studentaid.gov this month and look at what IBR would cost you, what RAP would cost you, what Standard would cost you, on your actual numbers. The version of you in November scrambling to pick a plan in the same week your first bill arrives is going to make a worse decision than the version of you choosing it calmly in June. Make it now.

Looking at the number is the move. Avoidance is more expensive than the worst-case payment.

If you’re an incoming college freshman

This is the version of this post your future self really wants you to read.

You are about to borrow money under a set of rules that did not exist when your older brother borrowed. Fewer plan options from day one. RAP is your default IDR plan — there’s no SAVE alternative for you to bet on. Borrowing limits on Grad PLUS and Parent PLUS loans are tightening. The $43,000 average debt projected for your graduating class is not a worst-case scenario. It’s the average.

You don’t have to take the maximum the financial aid letter offers you. That number is not a recommendation. It is a ceiling. The dollar you borrow at 18 is the dollar your 33-year-old self is still negotiating with their landlord about. Make the freshman version of you a hard, careful, non-nihilist borrower. Future you cannot do that retroactively.

A clean rule of thumb: borrow no more in total than you reasonably expect to earn in your first year out of school in your chosen field. If you’re going into education or social work, that’s a much smaller number than if you’re going into engineering. Pretending the number is the same is how a 17-year-old signs a note for the price of a starter home.

The five moves to make this week

Five things. None of them require more than an hour.

Log into studentaid.gov and check what plan you’re actually on right now. Not what you remember signing up for. What the system says today. If it says SAVE, your 90-day clock starts July 1.
Run the four-plan comparison on your real numbers. The official Loan Simulator on studentaid.gov takes about twenty minutes and shows you monthly payment and lifetime cost under each available plan. Do not pick a plan without looking at that screen.
If you have pre–July 1 loans, do not consolidate and do not take new loans this summer unless you absolutely have to. Protect the grandfather clause. If you’re considering grad school or a return semester, run the math on what the loss of legacy IDR would actually cost you over 25 years before you accept the new aid letter.
If you’re a May 2026 grad, make a small voluntary interest payment in July, August, September, and October. Even $50 each month. It blunts the capitalization at the end of your grace period and tells you something useful: which servicer’s portal you’ll be living inside of, and how to actually use it.
Set a calendar reminder for September 15, 2026 — two weeks before the 90-day window closes. If you haven’t picked a plan by then, that’s your last clean weekend to do it without the auto-enrollment running you over.

The part I want you to keep

The unfair version of the next six months is that millions of people who are doing their best are going to get caught flat-footed because the change is happening in the slowest possible way — a notice in a portal you don’t check, an email from a servicer you’ve never heard of, a 90-day clock that starts before most borrowers know it started.

You don’t have to be one of those people. Most of the borrowers who get auto-enrolled into Standard at a payment they can’t afford in October aren’t going to get there because they couldn’t have prevented it. They’re going to get there because they didn’t open the letter. The whole gap between a hard-but-manageable repayment and a financial crisis sits inside whether you opened the letter and clicked through.

You are going to be tempted, when the email shows up, to put it in the same mental folder where you keep the things you’d rather not look at. Don’t. The thing you’re avoiding is smaller than the avoidance. It almost always is.

I want you to be the borrower who knew the date, picked the plan, made the small voluntary payments through the grace period, and walked into October on a plan they chose. Not a plan that was chosen for them by inaction. That’s not a financial hack. That’s just paying attention at the moment paying attention matters most.

Nobody is coming to handle this for you. Not the servicer. Not the Department. Not your school’s financial aid office. The clock starts July 1 whether you’re ready or not.

Open the letter. Pick the plan. Make the September calendar reminder right now, while you’re thinking about it.

What to do before July 1

Two weeks. Three things, in order.

This weekend — log in to studentaid.gov. Find your current plan. Find your servicer. Save both somewhere you’ll see them again.
Next weekend — run the Loan Simulator. Write down what your payment would be under IBR, Standard, and RAP. Pick the one you’d choose if you had to choose today.
The day SAVE ends (July 1) — submit your plan election the same week the notice arrives. Don’t wait until day 89. The portals get slow at the deadline, and the version of you racing the clock makes worse decisions than the version of you with time.

The deadline is real. The 90 days are real. The grandfather clause is real, and it’s fragile.

Open the letter. Then pick.