The BareStory
The Trump administration has announced a proposed settlement with the state of Missouri that would terminate the Saving on a Valuable Education (SAVE) student loan plan. The agreement, which is pending court approval, would end the Biden-era income-driven repayment program that enrolls more than 7 million borrowers.
The settlement follows lawsuits from several Republican-led states that challenged the program's legality, leading a federal court to block it. According to the Department of Education, the SAVE plan was projected to cost over $342 billion in ten years. Education Secretary Linda McMahon called the program a "deceptive scheme," while Under Secretary of Education Nicholas Kent stated the settlement protects taxpayers. In contrast, the prior administration had promoted the plan as its most affordable option.
Under the agreement, the Department of Education will stop accepting new applications for the SAVE plan. Current enrollees, who were placed in a payment forbearance during the legal challenges, will have a "limited time" to choose a new repayment plan. The department is advising affected borrowers to use its Federal Student Aid Loan Simulator tool to review their options.
Student loan advocates have raised concerns about the settlement's impact. Persis Yu of the group Protect Borrowers described the agreement as a "pure capitulation," while Michele Zampini of The Institute for College Access & Success said borrowers could face higher payments. This move is part of a broader legislative agenda that intends to replace existing repayment plans with two new programs for loans issued on or after July 1, 2026.
How it may affect me
As a U.S. reader:
• Over 7 million borrowers on the SAVE plan must choose a new repayment option, which advocates warn could lead to higher monthly payments for some.
• The settlement aims to prevent a projected program cost of over $342 billion over ten years, which officials state is a move to protect taxpayers.
• Future student loan borrowers may have different repayment options, as the government intends to introduce two new programs for loans issued after July 1, 2026.
