Borrowers under the plan have a limited time to select a new repayment plan.
WASHINGTON — The U.S. Department of Education announced Tuesday that it reached a proposed settlement with the State of Missouri that would formally end the Biden administration’s Saving on a Valuable Education, or SAVE, student loan repayment plan.
Under the proposed agreement, the department will stop enrolling new borrowers in SAVE, deny any pending applications and move all current SAVE borrowers into compliant repayment plans.
If approved by a court, the settlement would end what the department described as a period of uncertainty for more than 7 million borrowers whose loans were placed in administrative forbearance after portions of the plan were halted. Interest on those loans began accruing again earlier this year following a federal appeals court ruling.
“For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers,” Under Secretary of Education Nicholas Kent said in a statement, adding that the agreement with Missouri would bring an end to what the department called illegal student loan forgiveness policies.
The Department of Education said it will begin direct outreach to affected borrowers in the coming weeks to help them select a new repayment plan. Borrowers will have a limited window to make that choice if the settlement receives court approval.
What is the SAVE plan?
The SAVE plan, officially called the Saving on a Valuable Education plan, was enacted by former President Joe Biden in 2023. It aimed to reduce the monthly payments for those with federal student loan debt based on their income and family size. Those who signed up for the program were also potentially eligible for loan forgiveness after a number of payments toward their debt.
For many borrowers, especially those with lower incomes, this resulted in lower payments, with some paying $0 per month.
The program was challenged by Republicans in court, and in Feb. 2025, a federal judge put a pause on the program. While the program was stuck in legal limbo, the federal government set the interest rate for debt under it to 0% while the challenges played out.
In July, Trump’s “Big, Beautiful Bill” was approved by Congress. Among its provisions were cuts to the number of payment plans available to student loan borrowers. At that time, SAVE loans also began accruing interest.
Under the bill, there are only two federal repayment plans available to borrowers. The first is a standard plan that allows borrowers to repay their loans over 10 to 25 years, with payments based solely on the loan amount.
The other, a “Repayment Assistance Plan,” is a replacement for the SAVE program. This plan is a fixed-rate program that would put monthly payments between 1% and 10% of their income. That program, according to some analysts, disadvantages lower-income families.
The Repayment Assistance Plan is set to begin on July 1, 2026.
