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Damircudic | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
Nearly 7 million federal student loan borrowers<\/a> remain enrolled in a defunct Biden administration-era repayment plan<\/a>, Nicholas Kent, a top official at the U.S. Department of Education, told CNBC on Thursday. <\/p>\n By staying in the Saving on A Valuable Education, or SAVE<\/a>, plan, these borrowers\u2019 debts are growing, and they\u2019re not making progress toward student loan forgiveness, said Kent, the undersecretary of education at the agency. <\/p>\n \u201cIt\u2019s a problem for borrowers,\u201d he said. \u201cThey\u2019re not recognizing the benefit of making their payments.\u201d <\/p>\n In recent weeks, just around 300,000 student loan borrowers have left SAVE, Kent said. The millions of borrowers who\u2019ve lingered in the plan are at risk of getting billed unaffordable payments once the plan disappears, or eventually falling into default. <\/p>\n Over 42 million Americans hold student loans, and the outstanding debt exceeds $1.6 trillion, according to the Congressional Research Service. <\/p>\n<\/div>\n The Biden administration introduced\u00a0SAVE\u00a0<\/a>in 2023, billing it as \u201cthe most affordable repayment plan ever created.\u201d Under the program, many borrowers expected their monthly bills to be cut in half. But Republican-led legal challenges quickly put the plan on ice.<\/p>\n Starting in July 2024, millions of student loan borrowers were placed in forbearance<\/a>\u00a0while the legal challenges played out, meaning they didn\u2019t owe monthly payments. A federal appeals court finally ordered the end of SAVE<\/a> earlier this year. <\/p>\n<\/div>\n The Trump administration has allowed borrowers to remain in the payment pause until recently. Officials said in late March that SAVE enrollees will get roughly 90 days<\/a> from July 1 to exit and select a new repayment option. <\/p>\n \u201cSAVE borrowers have to move,\u201d Kent told CNBC. <\/p>\n<\/div>\n Student loan borrowers enrolled in SAVE will face different deadlines for exiting the program, Kent said. <\/p>\n Borrowers should expect a 90-day window during which they can enroll in a different plan after they receive notice from their student loan servicer, the Education Department previously said. But those announcements could come on different dates throughout the summer, Kent said \u2014 \u201cwe don\u2019t want to overwhelm servicers.\u201d<\/p>\n<\/div>\n\u2018SAVE borrowers have to move\u2019<\/h2>\n
Borrowers to face different deadlines to exit SAVE<\/h2>\n