Student Loan Repayment SAVE Plan in Jeopardy

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The Trump Administration proposed an agreement that would end the Biden Administration’s “Saving on a Valuable Education” (SAVE) Plan, according to a U.S. Department of Education press release. 

The SAVE Plan was intended to be a mass federal student loan forgiveness initiative from the Biden Administration.  

DOE’s press release labels the SAVE Plan as “illegal” because it falsely promised low monthly payments and a short repayment timeline.  

In the DOE’s press release, they provide a background on the SAVE Plan, which was established on July 1, 2024. 

According to the Congressional Budget Office, the SAVE plan would cost taxpayers more than $342 billion over ten years. 

Taxpayers affected would include some who did not attend college or had already repaid their loans, according to the budget report. 

“As part of the proposed joint settlement agreement, the Department will not enroll any new borrowers in the illegal SAVE Plan, deny any pending applications, and move all SAVE borrowers into legal repayment plans,” says a statement in the DOE’s press release. 

If the joint settlement is approved by the court, then it will officially end the SAVE Plan, and more than 7 million borrowers will no longer be facing uncertainty when it comes to not being able to make payments on their federal loans. 

“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,” Under Secretary of Education Nicholas Kent said. 

The DOE, through the Office of Federal Student Aid (FSA), will provide support to currently enrolled borrowers in the SAVE Plan in selecting a new repayment plan. 

Looking forward the DOE said in their press release that they want to put students on a path to a “sustainable financial future while safeguarding the interests of American taxpayers.” 

“Unilaterally saddling taxpayers with someone else’s Ivy League debt ignored Congressional authority and was clearly unlawful. We appreciate President Trump’s real, long-term solutions instead of illegal student loan schemes,” Missouri Attorney General Catherine Hanaway said. 

The settlement agreement was jointly proposed by the U.S. Department of Education and the State of Missouri, as announced in the press release. 

Missouri became involved in the case, in April 2024, after their then Attorney General Andrew Bailey filed a lawsuit alongside other state’s Attorney Generals challenging what they deemed to be illegal regulations. 

If the proposal is approved, borrowers will have a limited time to select a new repayment option and begin paying off their loans.