Millions of student loan borrowers whose monthly payments were reduced to as low as $0 under a forgiveness plan started by the Biden Administration could be forced to move to new repayment plans and begin paying off their loans again, as the Trump Administration is moving to end the program.
The Department of Education announced this week that it had reached an agreement with the state of Missouri to end the Saving on Valuable Education (SAVE) plan, which has adjusted monthly payments for more than 8 million Americans—including roughly 7 million borrowers who are currently enrolled—based on their income and family size.
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Under the agreement, which still requires court approval, the department said it would not enroll new borrowers in the program and current SAVE enrollees would be left with a “limited time” to find a new plan to repay their loans.
The Trump Administration contended that SAVE—which Missouri and other states challenged in a lawsuit, arguing it was too generous—is “illegal” and would have cost taxpayers, including those who didn’t attend college or already paid off their own student loans, more than $342 billion over ten years.
“The law is clear: if you take out a loan, you must pay it back,” said Under Secretary of Education Nicholas Kent in a statement accompanying the announcement. “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.”
Read more: The Trump Administration to Resume Some Student Loan Forgiveness After Lawsuit: What to Know
The Education Department said it would provide support to borrowers currently enrolled in SAVE as they select a “legal repayment plan that helps put them on the path to a sustainable financial future while safeguarding the interests of American taxpayers.” Impacted borrowers will be contacted in the “coming weeks” to receive assistance in getting a new plan, the department said.
Here’s what to know about the SAVE plan, and how borrowers would be impacted by it ending.
What is the SAVE plan?
The Biden-Harris Administration launched the SAVE program in August 2023, calling it the “Most Affordable Student Loan Repayment Plan Ever to Lower Monthly Payments for Millions of Borrowers.”
The plan set out to halve payments for undergraduate loans, cut many borrowers’ monthly payments down to $0, and provide early forgiveness for borrowers whose original loan amounts were low. The plan allowed 4.6 million of the more than 8 million borrowers who enrolled in the program to lower their monthly payments to $0, according to advocacy group Protect Borrowers.
The popular plan has faced legal pushback, however, and has been blocked for months. In a ruling this February, a federal court sided with the Republican-led states who challenged the SAVE program, finding that they were likely to succeed in their argument that implementing the plan exceeded the Education Secretary’s authority. The decision upheld a preliminary injunction against the program previously issued by a lower court last summer.
After that earlier judgment, the Biden-era Education Department had placed borrowers enrolled in the program in an interest-free forbearance amid the ongoing legal battle. But this July, the department announced it would restart interest accrual for borrowers on Aug. 1 to comply with the federal injunction. Education Secretary Linda McMahon also encouraged borrowers to transition to other repayment plans at the time, saying SAVE enrollees “cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.”
The Big Beautiful Bill, which President Donald Trump signed into law in July, gave borrowers enrolled in SAVE and other student loan programs that are being eliminated until July 1, 2028, to find a new plan.
Protect Borrowers Deputy Executive Director Persis Yu said in a statement on Tuesday that SAVE’s elimination would “strip borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head.”
Kent, the Education Department official, and Missouri Attorney General Catherine Hanaway wrote in an op-ed published in the Wall Street Journal the same day of the department’s announcement that the “Administration isn’t blind to the mounting student debt burden or the skyrocketing costs of a college degree. But we refuse to force hardworking Americans to bear the burden of loans that aren’t theirs.”
What would the end of the program mean for borrowers?
If the agreement to end the SAVE program is approved by the court, the roughly 7 million borrowers now enrolled in SAVE would have to find a new plan and begin repaying their student loans.
All pending applications to the program would also be denied, and no new borrowers would be enrolled.
The Education Department advised borrowers to use a Federal Student Aid Loan Simulator to estimate their monthly payment amount, determine their eligibility for repayment options, and choose a new plan suiting their goals and needs.
What plans could current SAVE Plan enrollees move to?
Borrowers can enroll in another income-driven repayment (IDR) plan as an alternative to SAVE—although some other IDR plans are also on their way out under the Big Beautiful Bill.
One option is an Income-Based Repayment (IBR) Plan. This plan uses borrowers’ discretionary income—or the difference between their annual income and 150% of the federal poverty guideline for their state and family size—to determine their monthly payment amount. That amount is generally set at 10% of discretionary income, divided by 12, for people who borrowed after July 1, 2014, and 10% for people who borrowed before that date.
For a borrower to qualify for the plan, their monthly payment has to be lower than it would be under the Standard Repayment Plan with a 10-year repayment period.
The Standard Repayment Plan is a repayment option that borrowers automatically get enrolled in if they don’t pick a repayment plan. Monthly payments under this plan are a fixed amount calculated so that the entire loan is paid off during the repayment period, and are made for up to 10 years for loans that are not consolidated, or 10 to 30 years for consolidated loans.
“Monthly payments can be higher than other plans, but total interest paid is usually lower and length of repayment is usually shorter,” the department notes on a page explaining the plan.
Two new plans being introduced under the Big Beautiful Bill, a revised standard plan and an income-driven Repayment Assistance Plan, will be available beginning next July. Other IDR plans, including the Income-Contingent Repayment (ICR) Plan and the Pay as You Earn (PAYE) Plan, are being phased out.
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