End of SAVE Plan Leaves Borrowers Facing Growing Debt
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Should l Buy SLM?
Source: CNBC
- Termination of SAVE Plan: A federal appeals court has ordered the end of the SAVE plan, leaving over 7.2 million borrowers facing increasing debt, as they have been in forbearance since July 2024 without progress towards loan forgiveness.
- Debt Growth Risk: The average SAVE enrollee has a loan balance of approximately $57,000 with a 6.7% interest rate, and since interest resumed in August, their debt is projected to have increased by over $2,500, exacerbating financial strain on borrowers.
- Challenges in Applying for New Plans: With the U.S. Department of Education's limited capacity to process applications, borrowers who wait until the end of the SAVE plan to apply for new income-driven repayment options may face longer wait times, increasing their financial risks.
- Cost of Switching Repayment Plans: While the Income-Based Repayment (IBR) plan is viewed as a better option, borrowers switching from SAVE could see their monthly payments double, adding further financial burden to those already under stress.
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Analyst Views on SLM
Wall Street analysts forecast SLM stock price to rise
11 Analyst Rating
7 Buy
2 Hold
2 Sell
Moderate Buy
Current: 20.640
Low
23.00
Averages
31.09
High
37.00
Current: 20.640
Low
23.00
Averages
31.09
High
37.00
About SLM
SLM Corporation is a holding company, which operates through various subsidiaries and is a financial brand for higher education. The Company’s primary business is to originate and service loans it makes to students and their families to finance the cost of their education. It also offers a range of deposit products insured by the Federal Deposit Insurance Corporation. Its primary private education loan product is the Smart Option Student Loan, which emphasizes in-school payment features that can produce shorter terms and reduce customers’ total finance charges. The Smart Option Student Loan generally runs for six months after the borrower separates from school but can run for up to 36 months for a small subset of graduate loans. It also offers six loan products for specific graduate programs of study. These include the Sallie Mae Law School Loan, the Sallie Mae MBA Loan, the Sallie Mae Graduate School Loan for Health Professions, the Sallie Mae Medical School Loan, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Sallie Mae Reports Strong Earnings but Stock Declines
- Earnings Performance: Sallie Mae reported revenues of $454.1 million, a 16.4% year-over-year increase, exceeding analysts' expectations by 1%, indicating strong performance in the education loan market; however, the stock has declined by 23.5%, currently trading at $20.43.
- Industry Outlook: The consumer finance sector performed well overall, with 19 companies reporting revenues in line with analyst expectations, but next quarter's revenue guidance is 1% below expectations, reflecting challenges faced by the industry amid economic slowdowns.
- Competitive Pressure: Despite Atlanticus Holdings reporting a remarkable 97.4% revenue growth to $609.2 million, surpassing expectations by 7.1%, Sallie Mae must contend with fierce competition from traditional banks and fintech firms, impacting its market share.
- Market Sentiment: Consumer finance stocks are down an average of 11%, reflecting investor concerns about future economic conditions; although Sallie Mae's earnings report was strong, market confidence in its future growth is affected.
See More
End of SAVE Plan Leaves Borrowers Facing Growing Debt
- Termination of SAVE Plan: A federal appeals court has ordered the end of the SAVE plan, leaving over 7.2 million borrowers facing increasing debt, as they have been in forbearance since July 2024 without progress towards loan forgiveness.
- Debt Growth Risk: The average SAVE enrollee has a loan balance of approximately $57,000 with a 6.7% interest rate, and since interest resumed in August, their debt is projected to have increased by over $2,500, exacerbating financial strain on borrowers.
- Challenges in Applying for New Plans: With the U.S. Department of Education's limited capacity to process applications, borrowers who wait until the end of the SAVE plan to apply for new income-driven repayment options may face longer wait times, increasing their financial risks.
- Cost of Switching Repayment Plans: While the Income-Based Repayment (IBR) plan is viewed as a better option, borrowers switching from SAVE could see their monthly payments double, adding further financial burden to those already under stress.
See More
U.S. Treasury Takes Over Student Loan Collections
- Treasury's New Role: The U.S. Treasury will take over the collection of nearly $1.7 trillion in federal student loans, providing 'operational support' for approximately 42 million borrowers, marking a significant reform by the Trump administration that may lead to further decentralization of education management.
- Impact on Defaulted Borrowers: Currently, around 9 million borrowers are in default, and the Treasury's involvement may increase uncertainty for these borrowers, although experts note that the Treasury's collection efficiency may be lower than that of private companies, prompting borrowers to monitor their repayment history closely.
- Policy Context: The Trump administration emphasizes that the Treasury has the unique experience and capability to manage this massive debt portfolio, aiming to clean up years of mismanagement; however, borrower reactions to this transition are marked by concern and anxiety.
- Borrower Rights Protection: Despite the change in management, borrowers' rights remain protected, and experts advise borrowers to download their loan data to prevent information loss while also keeping an eye on future Treasury support measures for non-defaulted loans.
See More
Trump Signs Executive Orders on Higher Education Amid Loan Backlog
- Loan Application Backlog: As of the end of February, over 576,000 federal student loan borrowers are still awaiting processing for income-driven repayment plan applications, indicating significant inefficiencies within the Department of Education that could exacerbate financial pressures on borrowers.
- Public Service Loan Forgiveness: An additional 88,170 borrowers are pending responses on their Public Service Loan Forgiveness buyback applications, a program designed to cancel debt for non-profit and government workers, highlighting the complexities and delays in government student loan relief efforts.
- Repayment Plan Changes: The Trump administration's policy shifts may impact existing repayment plans, particularly with the impending cancellation of the SAVE plan, which is expected to increase repayment burdens on borrowers and further strain their financial situations.
- Rising Default Rates: By December 2025, approximately 9 million borrowers were in default, with 42% of federal student loan borrowers reporting that their monthly payments hinder their ability to meet basic needs, underscoring the severe challenges posed by the current economic climate for borrowers.
See More
New Loan Options Enhance Graduate Financing Access
- Loan Options Expansion: Sallie Mae announces new loan options for medical and dental graduate students, supporting their transition from school to clinical practice by providing financing for up to 100% of certified costs, alleviating financial pressure during their education.
- Flexible Repayment Plans: The new loan options include flexible in-school repayment plans that allow students to defer payments, make interest-only payments, or pay a fixed amount during their studies, helping ease financial burdens with an extended grace period of up to 96 months.
- Increased Scholarship Opportunities: Sallie Mae offers various scholarship resources, including a $5,000 Grad School No Essay Scholarship awarded quarterly and the Bridging the Dream Scholarship in partnership with Thurgood Marshall College Fund, which has awarded $500,000 to graduate students since 2021.
- Dedicated Support Teams: Sallie Mae has established dedicated graduate support teams providing nationwide loan servicing, ensuring students receive professional guidance from application through repayment, further solidifying its leadership in the private student lending market.
See More
Sallie Mae Fund Opens Applications for Scholarships
- Scholarship Amount: The Sallie Mae Fund's Bridging the Dream Scholarship offers up to $10,000 each to 30 high school seniors, significantly alleviating financial burdens associated with higher education costs.
- Eligibility Criteria: Applicants must be Pell Grant-eligible high school seniors planning to attend an accredited two- or four-year college or an eligible certificate or technical program, ensuring that funds are directed to students in genuine need.
- Educational Investment: The Sallie Mae Fund has awarded nearly $5 million in scholarships to over 1,300 students, demonstrating its commitment to educational equity and providing resources to help students successfully complete higher education.
- Application Timeline: The application window for this scholarship is open until April 24, 2026, encouraging interested students to apply early to secure support and pave the way for future success.
See More
Sallie Mae Reports Strong Earnings but Stock Declines
- Earnings Performance: Sallie Mae reported revenues of $454.1 million, a 16.4% year-over-year increase, exceeding analysts' expectations by 1%, indicating strong performance in the education loan market; however, the stock has declined by 23.5%, currently trading at $20.43.
- Industry Outlook: The consumer finance sector performed well overall, with 19 companies reporting revenues in line with analyst expectations, but next quarter's revenue guidance is 1% below expectations, reflecting challenges faced by the industry amid economic slowdowns.
- Competitive Pressure: Despite Atlanticus Holdings reporting a remarkable 97.4% revenue growth to $609.2 million, surpassing expectations by 7.1%, Sallie Mae must contend with fierce competition from traditional banks and fintech firms, impacting its market share.
- Market Sentiment: Consumer finance stocks are down an average of 11%, reflecting investor concerns about future economic conditions; although Sallie Mae's earnings report was strong, market confidence in its future growth is affected.
See More
End of SAVE Plan Leaves Borrowers Facing Growing Debt
- Termination of SAVE Plan: A federal appeals court has ordered the end of the SAVE plan, leaving over 7.2 million borrowers facing increasing debt, as they have been in forbearance since July 2024 without progress towards loan forgiveness.
- Debt Growth Risk: The average SAVE enrollee has a loan balance of approximately $57,000 with a 6.7% interest rate, and since interest resumed in August, their debt is projected to have increased by over $2,500, exacerbating financial strain on borrowers.
- Challenges in Applying for New Plans: With the U.S. Department of Education's limited capacity to process applications, borrowers who wait until the end of the SAVE plan to apply for new income-driven repayment options may face longer wait times, increasing their financial risks.
- Cost of Switching Repayment Plans: While the Income-Based Repayment (IBR) plan is viewed as a better option, borrowers switching from SAVE could see their monthly payments double, adding further financial burden to those already under stress.
See More
U.S. Treasury Takes Over Student Loan Collections
- Treasury's New Role: The U.S. Treasury will take over the collection of nearly $1.7 trillion in federal student loans, providing 'operational support' for approximately 42 million borrowers, marking a significant reform by the Trump administration that may lead to further decentralization of education management.
- Impact on Defaulted Borrowers: Currently, around 9 million borrowers are in default, and the Treasury's involvement may increase uncertainty for these borrowers, although experts note that the Treasury's collection efficiency may be lower than that of private companies, prompting borrowers to monitor their repayment history closely.
- Policy Context: The Trump administration emphasizes that the Treasury has the unique experience and capability to manage this massive debt portfolio, aiming to clean up years of mismanagement; however, borrower reactions to this transition are marked by concern and anxiety.
- Borrower Rights Protection: Despite the change in management, borrowers' rights remain protected, and experts advise borrowers to download their loan data to prevent information loss while also keeping an eye on future Treasury support measures for non-defaulted loans.
See More
Trump Signs Executive Orders on Higher Education Amid Loan Backlog
- Loan Application Backlog: As of the end of February, over 576,000 federal student loan borrowers are still awaiting processing for income-driven repayment plan applications, indicating significant inefficiencies within the Department of Education that could exacerbate financial pressures on borrowers.
- Public Service Loan Forgiveness: An additional 88,170 borrowers are pending responses on their Public Service Loan Forgiveness buyback applications, a program designed to cancel debt for non-profit and government workers, highlighting the complexities and delays in government student loan relief efforts.
- Repayment Plan Changes: The Trump administration's policy shifts may impact existing repayment plans, particularly with the impending cancellation of the SAVE plan, which is expected to increase repayment burdens on borrowers and further strain their financial situations.
- Rising Default Rates: By December 2025, approximately 9 million borrowers were in default, with 42% of federal student loan borrowers reporting that their monthly payments hinder their ability to meet basic needs, underscoring the severe challenges posed by the current economic climate for borrowers.
See More
New Loan Options Enhance Graduate Financing Access
- Loan Options Expansion: Sallie Mae announces new loan options for medical and dental graduate students, supporting their transition from school to clinical practice by providing financing for up to 100% of certified costs, alleviating financial pressure during their education.
- Flexible Repayment Plans: The new loan options include flexible in-school repayment plans that allow students to defer payments, make interest-only payments, or pay a fixed amount during their studies, helping ease financial burdens with an extended grace period of up to 96 months.
- Increased Scholarship Opportunities: Sallie Mae offers various scholarship resources, including a $5,000 Grad School No Essay Scholarship awarded quarterly and the Bridging the Dream Scholarship in partnership with Thurgood Marshall College Fund, which has awarded $500,000 to graduate students since 2021.
- Dedicated Support Teams: Sallie Mae has established dedicated graduate support teams providing nationwide loan servicing, ensuring students receive professional guidance from application through repayment, further solidifying its leadership in the private student lending market.
See More
Sallie Mae Fund Opens Applications for Scholarships
- Scholarship Amount: The Sallie Mae Fund's Bridging the Dream Scholarship offers up to $10,000 each to 30 high school seniors, significantly alleviating financial burdens associated with higher education costs.
- Eligibility Criteria: Applicants must be Pell Grant-eligible high school seniors planning to attend an accredited two- or four-year college or an eligible certificate or technical program, ensuring that funds are directed to students in genuine need.
- Educational Investment: The Sallie Mae Fund has awarded nearly $5 million in scholarships to over 1,300 students, demonstrating its commitment to educational equity and providing resources to help students successfully complete higher education.
- Application Timeline: The application window for this scholarship is open until April 24, 2026, encouraging interested students to apply early to secure support and pave the way for future success.
See More
