What Changes to Student Loan Policy Mean for Borrowers Over 40

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Student loans are not just a young adult problem, and federal data shows that’s not really the case.

According to data collected from the U.S. Department of Education, more than half of federal student loan borrowers are now age 35 or older. Plus, borrowers in those older age brackets hold around two thirds of the total outstanding federal student loan balance in the country.

At the same time, repayment stress is rising fastest among older borrowers. Liberty Street Economics, a publication from the Federal Reserve Bank of New York, found that at least 1 in 4 borrowers over age 40 with a student loan payment due were either 90 days past due or already in default.

When it comes to upcoming changes to federal student loans, these can have more of a strain on borrowers in their 40s and beyond.

Why Older Borrowers Are More Vulnerable

The requirement to start paying back federal student loans again has most likely strained household budgets. It could be even more so because those who are older may have additional financial responsibilities like mortgage payments and taking care of dependents. 

Another reason why those over 40 may struggle with student loans is because they’re paying back loans for their children through Parent PLUS loans. These offer less flexible payment options. 

What’s more the Consumer Financial Protection Bureau found that the risk of those still paying off student loans goes up with age. Between 2017 and 2023, the number of federal student loan borrowers age 62 and up increased by 57%. These borrowers were also more likely to be in default. 

SAVE Plan Being Dismantled Is Adding to the Stress

Another major source of stress is the unraveling of the SAVE income-driven repayment plan. 

The Department of Education (DOE) announced in late 2025 that it would stop SAVE enrollments, deny pending applications and move existing SAVE borrowers to new plans (pending court approval). The SAVE plan is a federal student loan income-driven repayment (IDR) plan that allows you to make monthly payments based on factors like your income. 

Instead, a new income-driven repayment plan option known as the Repayment Assistance Plan (RAP) is scheduled to become available on Jul. 1, 2026. The DOE described RAP as a way to help simplify repayment options and replace current systems that aren’t working. 

The Department of Education has described RAP as part of a broader effort to simplify repayment options and replace parts of the current system.

If you’ve structured our repayment plans around the SAVE plan or other IDR programs, even a small change could unfortunately trigger paperwork delays, higher monthly payments and an increased risk in falling behind. Even if the RAP ends up being similar to the SAVE plan, the transition to the new program could mean you’ll need to be prepared to handle the transition seamlessly. 

What Borrowers Over 40 Can Do Now

To start, you can confirm what repayment plan you’re currently on and ensure you’re making on-time payments. Continue to monitor updates, especially if you’re enrolled in the SAVE plan. 

While changes are happening in the background, try to see how your budget could handle higher payments. Or, find ways to beef up your emergency savings in the meantime if higher payments temporarily catch you off guard. 

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