End of SAVE Plan Forces 7M Back Into Loan Repayment

Millions of student loan borrowers will resume payments after more than a year of uncertainty, as the Education Department said Tuesday it will end the Biden administration-era SAVE repayment plan under a court settlement sought by Republican-led states.

The department said the agreement, which still requires judicial approval, would dismantle the Saving on Valuable Education Plan and shift more than 7 million borrowers into other income-driven repayment options.

The decision ends one of the most generous federal repayment structures ever enacted, a plan that had allowed some borrowers to pay as little as $0 per month and qualify for forgiveness in as few as 10 years.

The SAVE Plan had been under a nationwide injunction for more than a year as Republican attorneys general argued the policy unlawfully reduced payments and accelerated forgiveness without congressional authority.

Those enrolled have been kept in forbearance during the litigation, but the settlement will require borrowers to return to active repayment once they select a new plan or are reassigned by the department.

Under Secretary of Education Nicholas Kent said the settlement protects taxpayers from what he described as an overreach by the prior administration.

"For four years, the Biden administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing administration," he said.

"The Trump administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: If you take out a loan, you must pay it back.

"Thanks to the state of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies," Kent said.

Advocates for borrowers warned that the transition will strain households that built budgets around the SAVE formula.

"Today's decision from the Department of Education is devastating for the nearly 8 million student loan borrowers who depended on the SAVE plan to keep their payments affordable," said Natalia Abrams, president and founder of the Student Debt Crisis Center.

"Borrowers have endured years of uncertainty, and this only exacerbates the confusion and financial strain they are already facing."

She said borrowers need "real relief and stability, not a return to unaffordable, costly student loan payments that push them closer to financial crisis."

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