The Trump administration announced a proposed joint settlement with Missouri that could require millions of borrowers who benefited from a Biden-era payment pause to resume repayment.
According to a Tuesday press release from the U.S. Department of Education, student loan borrowers currently enrolled in the Saving on a Valuable Education (SAVE) plan forbearance will need to choose a new repayment option.
The entire SAVE program has been blocked since February, after the 8th U.S. Circuit Court of Appeals sided with Republican-led states that argued former President Joe Biden did not have the authority to implement the student loan relief plan.
As of July, the Education Department identified more than 7.6 million borrowers participating in the SAVE forbearance program.
The proposed settlement would resolve the SAVE litigation by having the Education Department agree not to enroll any new borrowers in the program and to move all current participants “into legal repayment plans,” according to the department.
Higher education expert Mark Kantrowitz noted that borrowers will likely need to exit the SAVE forbearance early next year, sooner than many expected. The SAVE program, introduced under President Donald Trump’s “big beautiful bill,” was originally set to expire on July 1, 2028.
GOP-led states had argued in court that the Biden administration was using SAVE as a workaround to forgive student debt after the Supreme Court blocked his broad debt cancellation plan in June 2023.
Two key features of SAVE drew the lawsuits’ attention: it offered lower monthly payments than any other federal repayment plan and accelerated debt relief for borrowers with smaller balances.
The proposed settlement comes four months after the Education Department resumed charging interest on loans for borrowers remaining in SAVE. Consumer advocates criticized the plan. Persis Yu, deputy executive director and managing counsel at Protect Borrowers, said it would “strip borrowers of the most affordable repayment plan.”
More than 42 million Americans hold student loans, with total debt exceeding $1.6 trillion, according to the Congressional Research Service.
How will the end of the SAVE forbearance affect you? If you’d like to share your experience for an upcoming story, please email annie.nova@nbcuni.com
0 Comments