In a sweeping shift for millions of student loan borrowers, the Trump administration on Tuesday announced a settlement that would dismantle the SAVE repayment plan — a signature Biden-era program long targeted by conservatives and bogged down in legal battles.
The Saving on Valuable Education (SAVE) plan, launched in 2023, was designed to lower monthly payments for struggling borrowers by tying them to income and family size, limiting interest growth, and speeding up loan forgiveness for low-income borrowers. Trump officials have repeatedly labeled the program “illegal” and sought to end it.
Under the proposed settlement, the Department of Education said it will halt new enrollments, reject pending applications, and transition all current SAVE participants into other legally authorized repayment plans. If approved by a federal judge, the agreement would formally shut down SAVE. Borrowers will have a yet-to-be-specified “limited time” to choose a new plan, with the Federal Student Aid office expected to guide them through the transition. The deal resolves a lawsuit led by Missouri, one of seven Republican-led states that sued to block SAVE in 2024.
“For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers simply for political gain,” Under Secretary of Education Nicholas Kent said. “The Trump Administration is righting this wrong and bringing an end to this deceptive scheme.”
Borrower advocates criticized the move, warning it could sharply increase costs for those already stretched thin. “Ripping the SAVE plan away from borrowers without a clear, affordable alternative is reckless and short-sighted,” said Abby Shafroth of the National Consumer Law Center.
The settlement follows the Department of Education’s recent decision to resume interest on loans held by SAVE borrowers — a change that affected nearly 8 million people. Although their payments remained paused through forbearance, many saw their balances rise each month as interest restarted.
Student loan policy has been shifting rapidly during President Donald Trump’s second term. His sweeping “One Big Beautiful Bill Act,” enacted earlier this year, capped how much students and parents can borrow in federal loans, eliminated several deferment options, and significantly narrowed the available repayment choices.
The SAVE plan had long offered some of the most generous benefits in the federal system, including payments as low as 5% of discretionary income and loan forgiveness in as few as 10 years for certain borrowers. But in 2024, federal judges in Kansas and Missouri blocked key provisions, ruling that the Biden administration exceeded its authority by enacting such changes without Congress. Following those decisions, SAVE borrowers were moved into no-interest forbearance — a temporary pause now poised to come to an end.
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