1. What is the new SAVE Plan in the IDR program?

The SAVE Plan was originally introduced as a more affordable income‑driven repayment (IDR) option. However:

  • As of spring 2025, the plan is blocked due to court rulings. Student Loan Borrowers Assistance

  • The US One Big Beautiful Bill Act (OBBBA), signed in July 2025, phases out SAVE (and several other IDR plans) by July 1, 2028.

  • If you are already enrolled in SAVE, your loans were placed in forbearance—but interest has resumed accruing as of August 2025.

Bottom line: You can no longer sign up for SAVE. If you’re on SAVE, now is a critical time to review your options, because interest is rising, forgivable‑payment credits have been paused, and the plan will eventually be eliminated.

2. What repayment plan options remain?

Under the 2025 overhaul, the law retains just two repayment/IDR plans long-term:

  • The Income‑Based Repayment (IBR) Plan – now potentially available to more borrowers thanks to relaxed eligibility rules.

  • A new plan called Repayment Assistance Plan (RAP), set to begin for new borrowers on July 1, 2026.

Because of these shifts, older plans — like SAVE, PAYE, and ICR — are being phased out between 2025–2028.

3. What is the impact on Public Service Loan Forgiveness (PSLF)?

PSLF remains an available forgiveness path under current rules.

  • Under the new legislation, RAP payments (once available) will count toward PSLF, starting July 1, 2026.

  • BUT the law also directs the government to revise what qualifies as “public service,” potentially excluding organizations deemed to have a “substantially illegal purpose.” That could disqualify some borrowers whose employers are under new scrutiny.

Important: If your employer’s eligibility is uncertain — or could become ineligible — you may want to review and, if possible, certify employment or prepare alternate repayment/forgiveness strategies before July 2026.

4. What happened to loan‑forgiveness under income-driven repayment (IDR)?

  • As of late 2025, the U.S. Department of Education (ED) has resumed processing loan forgiveness for borrowers on qualifying IDR plans (e.g., IBR) — after a temporary halt earlier in the year.

  • Borrowers who previously applied to IDR but were denied because they didn’t meet “partial financial hardship” may now be eligible under updated IBR rules. The ED expects to finalize this change by December 2025.

  • However, because SAVE is being eliminated, you may need to switch to IBR or another remaining plan to preserve eligibility for future forgiveness or manageable payments.

5. Are forgiven loans still tax-free?

  • Forgiveness under PSLF has historically been — and remains — tax‑free.

  • For IDR‑based forgiveness: the existing tax‑free benefit (from the 2021 law) is scheduled to expire December 31, 2025. After that, future forgiven balances may be taxable — depending on new legislation or rule changes.

  • That makes 2025 a particularly important window to finalize any forgiveness applications/approvals if you want to preserve tax‑free status.

6. How are borrowing limits and loan availability changing?

Because of the 2025 law changes:

  • Graduate students’ unsubsidized loan limits are capped at $20,500 per year, with a lifetime limit of $100,000 (for non‑professional degrees).

  • “Professional” graduate degrees (e.g., medical or law) have a higher cap: $50,000 per year with $200,000 lifetime.

  • The separate Grad PLUS loan program will be eliminated for new borrowers starting July 1, 2026.

  • Parent PLUS loans will face stricter limits: starting July 2026, a $20,000 per dependent annual limit and $65,000 total per dependent.

These changes dramatically shift the landscape for future borrowers — meaning repayment planning and loan‑amount decisions are more important than ever.