- Department of Education reached proposed settlement with Missouri to terminate the SAVE student loan repayment plan affecting over 7 million borrowers.
- Administration calls SAVE illegal federal overreach, arguing taxpayers would bear excessive costs and borrowers must repay loans.
- Borrowers face higher payments and lost forgiveness progress while FSA offers transition guidance and new repayment options.
In a significant policy reversal, the Trump administration’s Department of Education announced on Tuesday that it has reached a proposed joint settlement with the state of Missouri to end one of the Biden era’s flagship student loan relief programs—the Saving on a Valuable Education, or SAVE, plan.
This move effectively terminates a program that currently enrolls over 7 million borrowers, delivering what the administration describes as a win in its broader push to undo former President Joe Biden’s debt cancellation initiatives.
The settlement comes after years of legal battles and marks the latest effort by the new administration to emphasize personal responsibility in loan repayment.
The FrankNez Media Daily Briefing newsletter provides all the news you need to start your day. Sign up here.
– FNM
What Was the SAVE Plan, and Why Was It So Popular?
Launched by the Biden administration after the Supreme Court rejected a broader debt relief effort in 2023, the SAVE plan was billed as the most affordable repayment option ever created for federal student loans.
It stood out for several borrower-friendly features:
- $0 monthly payments for those earning roughly $16 an hour or less.
- Reduced payments overall for millions, based on income and family size.
- Protection against exploding interest balances, even if borrowers were keeping up with their required payments.
As one of several income-driven repayment (IDR) plans, SAVE aimed to make the end of the pandemic-era payment pause less burdensome when repayments resumed.
For many, it offered a lifeline, tying payments to what people could actually afford while accelerating paths to forgiveness in some cases.
The Administration’s Stance: “The Law Is Clear”
Trump’s Education Department has been vocal in its criticism of these policies, viewing them as unfair burdens on taxpayers.
Under Secretary of Education Nicholas Kent put it bluntly in a department release: “The law is clear: if you take out a loan, you must pay it back.”
He went on to thank Missouri and other states for challenging what he called “egregious federal overreach,” adding that taxpayers “will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.”
Education Secretary Linda McMahon, a longtime opponent of widespread forgiveness, echoed this in a post on X: “The Biden Administration’s illegal SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years. We won’t tolerate it.”
The department framed the settlement as correcting a “deceptive scheme” and a step toward ensuring Americans aren’t on the hook for others’ debts.
The Legal Backdrop That Led Here
The roots of this settlement trace back to lawsuits filed by several Republican-led states, led by Missouri, against the Biden administration.
In 2024, a federal appeals court blocked key parts of SAVE, halting its full implementation.
Tuesday’s proposed agreement would resolve those ongoing cases, paving the way for the program’s complete shutdown.
It’s part of a larger pattern: the Trump administration has been systematically rolling back Biden’s various forgiveness efforts since taking office.
What Happens Next for the Millions Enrolled?
The Department of Education says it will help affected borrowers transition.
The Federal Student Aid (FSA) office plans to reach out with guidance on switching to a new, “legal repayment plan.”
Borrowers will have a limited window to make the change, and tools like the FSA’s Loan Simulator are available to estimate new payments and find the best fit.
Still, the shift won’t be seamless for everyone currently benefiting from SAVE’s lower terms.
Borrowers and Advocates Push Back
Not everyone’s celebrating. Student loan advocates are sounding alarms about the potential fallout.
Michele Zampini, associate vice president of federal policy & advocacy at The Institute for College Access & Success (TICAS), warned in a statement:
“The 7+ million borrowers enrolled in SAVE will face higher monthly loan payments — and may lose out on months of progress toward loan forgiveness.”
Persis Yu, deputy executive director and managing counsel at Protect Borrowers, called the settlement “pure capitulation” that “goes much further than the suit or the 8th Circuit order requires.”
She described it as part of an “unrelenting, right-wing push to jack up costs on working people with student debt,” arguing it removes the most affordable option for staying current on loans while covering basics like housing.
Other Changes Coming to Americans
This isn’t happening in isolation.Recent legislation under Trump’s “One Big Beautiful Bill Act” includes provisions to phase out all existing student loan repayment plans—including SAVE and other IDRs—for new loans starting July 1, 2026.
Those would be replaced by just two options: a standard plan and a new income-based Repayment Assistance Plan (RAP).For current borrowers, though, the immediate impact of ending SAVE could reshape budgets right away.
As the department moves forward with this settlement, millions are left watching closely—wondering how much more they’ll owe each month and what it means for their long-term financial stability.
Also Read: Trump Aides Now Want President to Stop Blaming Biden for His Own Mess
Contact | About | Home | Newsletter
