What the end of the Biden-era SAVE plan means for student loan borrowers – Explained

The US Department of Education, under the Trump administration, on Tuesday (December 9) announced a proposed joint settlement agreement with the state of Missouri that would end the controversial “Save on a Valuable Education” (SAVE) student loan repayment plan. The deal, which requires court approval, caps a long legal battle led by Missouri and other states that have repeatedly challenged the legality of the Biden administration’s mass student loan forgiveness efforts, including the SAVE plan. Key Provisions of the Proposed Settlement If approved by the court, the settlement would immediately end the SAVE plan, affecting more than 7 million currently enrolled borrowers who would have to switch to a legal repayment option. -The Department will not enroll any new borrowers in the SAVE plan. -All pending applications will be denied. -All current SAVE borrowers will be moved to legal repayment plans. The department agreed to a negotiated rulemaking session to remove the SAVE plan from federal regulations, although forbearance and deferral provisions will continue to count toward income-driven repayment (IDR) forgiveness. Under Secretary of Education Nicholas Kent praised the action, calling the SAVE plan an “illegal and irresponsible student loan policy” that sought to illegally shift debt onto American taxpayers without congressional authorization. “The Trump administration is righting this wrong and ending this fraudulent scheme,” Kent said. “The law is clear: if you take out a loan, you must repay it.” Missouri Attorney General Catherine Hanaway, whose office led the legal challenge, said: “The unilateral saddling of taxpayers with someone else’s Ivy League debt ignored Congress’s authority and was clearly illegal. We appreciate President Trump’s real, long-term solutions instead of illegal student loan schemes.” Timeline and next steps for borrowers The SAVE plan, which offered payments as low as $0 and short-term forgiveness for some, was estimated by the Department of Education to cost more than $342 billion over ten years. Its implementation has been repeatedly blocked by district and appellate courts since the initial lawsuit was filed in April 2024. Current SAVE borrowers will face a limited time to choose a new, legal repayment plan once the deal is approved. The Office of Federal Student Aid (FSA) will begin direct outreach to provide guidance on the transition. Borrower Action: Borrowers are strongly encouraged to use FSA’s Loan Simulator tool to explore available legal repayment plans. New IDR Plan: The Department is working to implement the new Repayment Assistance Plan (RAP), created by the One Big Beautiful Bill Act, which will be available to borrowers by July 1, 2026. This plan is part of a broader effort to simplify student loan repayment options, which will eventually leave only a revised Standard Plan, the existing Income-Based Repayment Plan, and the new RAP. Borrowers can find the most up-to-date information regarding the settlement and its impact at StudentAid.gov/courtactions.