Millions Face Return to Repayment
If you're one of the 7.6 million borrowers who've been enjoying the SAVE plan's payment pause, things are about to change. The U.S. Department of Education announced Tuesday it's working on a settlement with Missouri that would effectively kill the Biden administration's flagship student loan relief program.
The Saving on a Valuable Education plan was designed to make loan payments more manageable by reducing monthly bills and speeding up debt forgiveness for borrowers with smaller balances. But under the proposed settlement, the Education Department would stop accepting new SAVE enrollments and transfer everyone currently in the program to other legally recognized repayment plans.
The Price Tag Debate
Here's where the politics get interesting. According to the Education Department, the SAVE plan was going to cost taxpayers over $342 billion across ten years. That's a talking point Republicans have hammered repeatedly, noting that many taxpayers never went to college or already paid off their own loans.
The SAVE plan has been stuck in legal limbo since February. The 8th U.S. Circuit Court of Appeals sided with Republican-led states, ruling that former President Joe Biden didn't have the authority to create the program in the first place. The Trump administration had already announced in July that the Biden-era relief was expiring and warned borrowers about incoming interest charges.
What's Next for Borrowers
This settlement represents the latest chapter in an ongoing battle over student loan relief. Back in June, Republican lawmakers proposed changes to federal student loan programs that critics say could make college more expensive and deepen existing inequities. There's also another deadline looming: tax-free student loan forgiveness is scheduled to expire in 2026, which could stick borrowers with unexpected tax bills on forgiven debt.
For now, the roughly 7.6 million people enrolled in SAVE forbearance as of July should prepare for a transition to different repayment terms.