Move To End SAVE Plan For Borrowers Comes As California Student Loan Delinquencies Durge

The federal government has reached a legal settlement that will effectively shut down the SAVE income‑driven repayment plan at the same time California is seeing a sharp jump in student loan delinquencies, with about 11% of borrowers now at least 30 days late on payments.​

What is happening to SAVE?

The Saving on a Valuable Education (SAVE) plan, created under the Biden administration, set monthly federal student loan payments based on income and family size and could reduce some borrowers’ payments to very low amounts, even zero in some cases. Under a proposed legal settlement between the U.S. Department of Education and several Republican‑led states, no new borrowers will be allowed into SAVE, pending applications will be denied, and existing enrollees will be moved to other repayment plans once courts sign off.​

The Trump administration argues that SAVE unlawfully shifted costs to taxpayers and has pushed to dismantle it, estimating the plan would have added hundreds of billions of dollars to federal costs over a decade. Roughly 7 million borrowers nationwide are currently enrolled in SAVE and have been in an extended period of administrative forbearance while the program’s legality was litigated.​

California’s delinquency surge

Analyses from the California Policy Lab and related reporting show that about 11% of California student loan borrowers are now at least 30 days delinquent, roughly triple the pre‑pandemic rate of around 3.7%. Older borrowers in California, such as Gen X and baby boomers, are particularly affected, with delinquency rates of about 12% and higher rates in lower‑income regions like the Central Valley, where more than 16% of borrowers are behind on payments.​

The spike follows the full resumption of federal student loan payments after the pandemic-era pause and “on‑ramp” protections expired, meaning missed payments now show up on credit reports and can trigger collections activity. At the same time, average monthly payments had previously fallen because more borrowers were using income‑driven plans like SAVE and some received targeted forgiveness, a trend that could reverse as SAVE is dismantled and replaced by less generous options.​

How ending SAVE ties into the surge

Consumer and policy groups warn that ending SAVE removes one of the most affordable safety valves for borrowers whose budgets are already strained, increasing the risk that more Californians will miss payments or fall into default. For borrowers who depended on SAVE’s lower payment formulas and interest protections, being shifted into standard or less generous income‑based plans is likely to raise required monthly payments, which can worsen delinquency trends that are already elevated.​

At the same time, federal budget and policy changes are consolidating repayment options and phasing out several older income‑driven plans, further limiting flexible pathways for distressed borrowers. Experts note that, without robust income‑linked plans and outreach, many borrowers—especially those in high‑cost states like California—may face what some describe as a “default cliff,” where financial pressures and higher payments collide.​

What borrowers can do now

Borrowers in California and elsewhere are being told to watch for communication from the Education Department and servicers about which new plan they will be moved into and what their payment will be. Options that may remain include a standard fixed repayment schedule, an alternative income‑based program created in the latest federal budget, and Public Service Loan Forgiveness for qualifying public and nonprofit workers.​

Advocacy organizations and legal aid groups in California are encouraging borrowers to: check their loan status and contact information, use official federal tools to estimate payments under remaining plans, and seek free counseling before missing payments. Specialists warn borrowers to be cautious of scams that promise quick forgiveness or charge fees for services that legitimate nonprofit counselors and federal agencies provide at no cost.​

At a glance: SAVE vs what’s next