460,000 Student Loan Borrowers Seeking Lower Payments Will Be Denied. What to Do If You're One of Them

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The Department of Education will deny nearly half a million student loan borrowers who applied for the lowest repayment plan based on their income.
Getty Image/ Zooey Liao/ CNET
Nearly half a million federal student loan borrowers who applied for lower monthly payments will be denied by the Department of Education.
Based on internal documents obtained by Politico, the department is rejecting 460,000 student loan borrowers who selected the lowest payment option based on their income. For most applicants, that was the Saving for a Valuable Education repayment plan.
SAVE was struck down by a federal court in February, so how were people still applying for the plan? It's likely the Education Department is still processing applications submitted before the Trump administration removed the SAVE plan as an option on Feb. 21, 2025, said student loan expert Mark Kantrowitz.
As of June 30, the department reported 1.5 million pending applications for borrowers who are seeking Income-Driven Repayment plans. It processed 186,731 applications in June.
The Department of Education did not immediately respond to a request for comment.
Processing delays are the latest hurdle for student loan borrowers trying to navigate student loan repayment. Millions of SAVE borrowers' loans are currently in a general forbearance, with payments expected to remain on hold until mid-2026. However, the Department of Education announced this month that those loans will start accruing interest again on Aug. 1, so borrowers may be feeling pressured to choose another repayment program.
If you've applied for a repayment plan, here's what you need to know about the status of your application and when you could start repayments.
Read more: SAVE Student Loan Borrowers Have Less Than 2 Weeks Before Interest Restarts. Here's What to Do
How can you find out the status of your loan and repayment plan request?
If you applied for a new repayment plan and are denied, your loan processor should notify you when your application has been processed. You can also check the status of your plan request by logging into your StudentAid.gov account and going to the "My Activity" page. Your application should be listed as In Review, Action Required, Completed or Closed.
Although the Federal Student Aid site says processing typically takes about 30 days, it notes you should expect delays due to the high volume of requests.
What happens if I'm rejected for a repayment plan?
If you applied for an income-driven repayment plan and were rejected, you may be placed in a standard 10-year repayment plan if you don't choose another repayment plan, Kantrowitz said. "That's typically what happens when a borrower is no longer eligible for an income-driven repayment plan."
However, you can apply for another repayment plan at this time. The other repayment plans are also in a bit of transition since the passage of the Republican-led Big Beautiful Bill. Existing borrowers can still sign up for the Income-Based Repayment plan. Two other income-driven repayment plans, income-contingent and PAYE, are still options on the federal student loan site, but will be phased out.
Existing borrowers will also have the option to enroll in the Repayment Assistance Plan, a new plan that was passed in the bill, but this option won't be available until next year.
"The best option for most borrowers who were in the SAVE repayment plan is IBR, since IBR still qualifies for forgiveness, while ICR and PAYE do not," Kantrowitz said. "[Previous] payments made under SAVE, ICR, PAYE, REPAYE and IBR count toward IBR forgiveness."
If you're a SAVE borrower who applies for a new repayment plan and it's held up by processing delays, your loans should remain in good standing while you're waiting. However, interest will start accruing next month, so you may consider making interest-only payments while waiting for your application to process.