Millions of federal student loan borrowers across the country are confronting major repayment changes following the end of the SAVE plan, and the impact could be felt throughout Orange County, home to major institutions including University of California, Irvine, California State University, Fullerton, Chapman University, and several other colleges that collectively educate tens of thousands of students each year. Former SAVE borrowers are now being directed toward alternative repayment options, including the new Repayment Assistance Plan, or RAP, which officially launched in 2026.
A new analysis by Freedom Debt Relief suggests some middle-class families could face substantial increases in their monthly student loan payments under RAP. The report found that households earning between $90,000 and $100,000 annually with four dependents could see their payments rise from roughly $33 per month under SAVE to more than $512 per month under RAP, representing an increase of more than 1,400 percent. Other family profiles examined in the study also showed significant payment increases, particularly among households with multiple children or other dependents. According to the report, the changes could add thousands of dollars annually to household expenses.
What Was the SAVE Plan?
The SAVE plan, short for Saving on a Valuable Education, was introduced as an income-driven repayment program intended to reduce monthly student loan bills by basing payments on discretionary income while taking family size into account. The plan became popular because many low-income and middle-income borrowers qualified for very low monthly payments, and in some cases no monthly payment at all. The program also included protections against growing interest balances and offered pathways to loan forgiveness.
However, the plan became the subject of extensive litigation and political controversy. Following court rulings and subsequent federal policy changes, SAVE was terminated in 2026, forcing millions of borrowers to evaluate alternative repayment options.
What Is RAP?
The new Repayment Assistance Plan, known as RAP, is now one of the primary income-driven repayment options available to federal student loan borrowers. Under RAP, monthly payments are generally calculated using a percentage of a borrower’s adjusted gross income, with credits available for dependents claimed on federal tax returns. The plan includes a minimum monthly payment requirement and offers loan forgiveness after 30 years of qualifying payments.
Supporters argue RAP provides a more streamlined repayment system while still offering protections against excessive interest accumulation. Critics, however, contend that many former SAVE borrowers may end up paying significantly more each month because RAP does not replicate the generous payment calculations that SAVE provided for larger families
Which Families Could Be Hit Hardest?
According to Freedom Debt Relief’s analysis, the households facing the largest percentage increases include:
- Families earning $90,000 to $100,000 annually with four dependents.
- Families earning $60,000 to $70,000 annually with two dependents.
- Families earning $80,000 to $90,000 annually with three dependents.
- Families earning $100,000 to $125,000 annually with four dependents.
- Families earning $50,000 to $60,000 annually with one dependent.
Several of these borrower groups could experience annual increases ranging from roughly $2,500 to nearly $9,000 depending on household income and family size.
A Freedom Debt Relief spokesperson said the study found that middle-income families with multiple dependents may face some of the steepest adjustments because SAVE’s formulas accounted for household size in ways that RAP does not fully replicate.
Potential Impact on Orange County
For Orange County residents, the changes arrive as many households continue to face high housing costs, rising insurance premiums, elevated grocery prices, and increasing childcare expenses. Graduates of local institutions including University of California, Irvine, California State University, Fullerton, and Chapman University frequently enter careers in education, healthcare, public service, technology, and business while carrying substantial student loan balances.
For younger professionals already struggling with Southern California’s cost of living, an additional several hundred dollars in monthly student loan payments could significantly affect household budgets, savings goals, and homeownership plans.
The issue may be particularly relevant in Orange County because of the region’s large college-educated workforce and concentration of public-sector employees, including teachers, nurses, social workers, and government employees who have traditionally relied on income-driven repayment programs while building their careers.
What Borrowers Should Do Next
Financial experts generally recommend that former SAVE borrowers carefully review all repayment options before making a decision. Depending on individual circumstances, borrowers may still qualify for other repayment plans, including Income-Based Repayment, which remains available alongside RAP. Borrowers should compare monthly payment amounts, forgiveness timelines, and total long-term repayment costs before selecting a new plan.
For many Orange County families, the transition away from SAVE may become one of the more significant household budgeting challenges of the coming year, particularly for borrowers with children and moderate incomes who benefited most from the previous program’s payment formulas.
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