Millions of SAVE Borrowers Forced to Switch Plans Soon, Setting Up a Dysfunctional Servicing System to Fail Borrowers Once Again

June 11, 2026 | WASHINGTON, D.C. — Following the One Big Beautiful Bill Act and Education Secretary Linda McMahon striking a deal with the Missouri Attorney General to vacate the Saving on a Valuable Education (SAVE) plan, millions of student loan borrowers are about to be forced to switch repayment plans, and a new report released today by Protect Borrowers and the Debt Collection Lab at Princeton University finds that the federal government stopped monitoring the companies responsible for handling that transition just as the stakes for borrowers hit an all-time high. 

The report, Repeat Offenders, exposes the ways that student loan servicing companies are driving up the cost of repaying student loans amid a worsening affordability crisis in which tens of millions of households are struggling to keep pace with the cost of living. Even worse, the Trump Administration is failing to carry out its basic statutory requirements to supervise these companies, allowing them to operate unchecked despite findings that they are failing borrowers, while paying these companies more than $1 billion a year. 

As the report highlights, the new “NextGen” student loan system treats student loan borrowers like a game of hot potato, bouncing borrowers between a spiraling network of private companies profiting off of their debt.

See the report here: https://protectborrowers.org/wp-content/uploads/2026/06/Servicer-Report.pdf

See the fact sheets here: https://protectborrowers.org/wp-content/uploads/2026/06/Servicer-Report-fact-sheets.pdf 

“Every time a borrower’s loan changes hands, it’s a chance for something to go wrong. Unfortunately, the U.S. Department of Education forces the burden of catching those errors onto borrowers, rather than onto the companies it pays billions of dollars to manage these loans,” said Bonnie Latreille, visiting Senior Fellow with the Debt Collection Lab at Princeton University and former Student Loan Ombudsman for the U.S. Department of Education. “This report makes clear that the dysfunction borrowers experience isn’t a series of isolated mistakes. It’s the predictable result of a fragmented system that shifts risk onto the people least equipped to absorb it, with no one held accountable.”

Student loan servicers failing to provide accurate, timely information to borrowers is more important than ever before. Beginning July 1, 2026, more than 7 million student loan borrowers enrolled in the Saving on a Valuable Education (SAVE) plan will be forced to switch repayment plans within 90 days. With nearly 530,000 Income-Driven Repayment (IDR) applications currently unprocessed, this backlog will rapidly balloon into millions—threatening to leave borrowers waiting years for relief and pushing an already-broken student loan system to the point of collapse. 

“The harm student loan borrowers face today from student loan servicing companies is not accidental—it is the predictable product of decades of policymakers and regulators looking away while the same repeat offenders are paid to rack up a long track record of illegal actions and errors,” said Chris Hicks, Senior Policy Advisor at Protect Borrowers. “Now 7.5 million borrowers have weeks to switch repayment plans. The companies standing between them and default are the same ones that have spent decades driving borrowers into it. Lawmakers and regulators at every level must step up now to protect borrowers by reining in these servicers—instead of handing them yet another opportunity to profit at borrowers’ expense.”

As millions of borrowers are forced to move into more expensive repayment plans in the coming weeks, millions more have already fallen into default on their student loans because of the lack of affordable repayment plans and as other costs continue to skyrocket. Protect Borrowers’ previous analysis of government data found that by the end of 2025, nearly 9 million student loan borrowers had defaulted nationwide, with a borrower defaulting every nine seconds.

Learn more about the companies hired by the U.S. Department of Education here: https://protectborrowers.org/wp-content/uploads/2026/06/Servicer-Report-fact-sheets.pdf 

Further Reading

Read Protect Borrower’s blog on student loan servicers: The Student Loan Companies Driving the System Today

Read about Protect Borrower’s work on student loan servicers here.

Press release on AFT filing groundbreaking consumer protection lawsuit against MOHELA for mismanagement of millions of borrower accounts: Embattled Student Loan Servicing Giant MOHELA Hit with Groundbreaking Consumer Protection Lawsuit for Failing 8 Million Student Borrowers

Years-long investigation revealing MOHELA’s long history of servicing failures and a “call deflection” scheme: The MOHELA Papers: The Rise of A Student Loan Servicing Giant and the Fall of the Student Loan System

List of questions to ED following announcement of whitelabeling operations by servicers awarded Business Processing Operations contracts: Critical Questions for U.S. Department of Education Following Its Announcement That Specialty Student Loan Servicers Will Take Over Aspects of the Student Loan System

Blog on call-in day of action revealing servicers were unable to handle call volume: Dropped Calls, Hours on Hold, and Unanswered Questions: Student Loan Borrower Call-In Day Shows Servicers Are Alarmingly Unprepared to Return to Repayment

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About Protect Borrowers

Protect Borrowers (formerly Student Borrower Protection Center) is a nonprofit organization led by a team of experts, lawyers, and advocates fighting to build an economy where debt doesn’t limit opportunity. We investigate financial abuses, take predatory companies to court, and push for policies to protect working people from debt traps. We aim to deliver immediate relief to families while building power, driving systemic change, and fighting for racial and economic justice.

Learn more at protectborrowers.org or follow us on social @BorrowerJustice.

About Princeton University Debt Collection Lab

The Debt Collection Lab at Princeton University brings a hidden system into view. Every year, millions of Americans are sued over a debt and most face court alone, without a lawyer, yet little public data exists about who is being sued, where, or why outcomes vary so sharply between neighborhoods. The Debt Collection Lab builds public-facing tools and research to change that, including a tracker that monitors debt collection lawsuits in real time and reveals which communities are hardest hit by disparities in race, income, and legal representation. By pairing data with art and storytelling, the Lab works to reframe the conversation about debt—because it is important that we understand debt collection so that we can change it.