The Trump administration has proposed a settlement with Missouri that could end the Biden-era student loan relief known as the SAVE plan. This move would push millions of borrowers currently in forbearance back into active repayment, as confirmed by the U.S. Department of Education.
Since February, the SAVE program has been blocked after the 8th U.S. Circuit Court of Appeals sided with Republican-led states challenging President Biden’s authority to implement the plan. Over 7.6 million borrowers remain enrolled in SAVE forbearance as of July, according to the Education Department.
Under the proposed settlement, the department has agreed to stop enrolling new borrowers into the SAVE plan. Furthermore, all current SAVE participants will be required to switch to legally approved repayment plans by early next year, expert Mark Kantrowitz noted. This timeline contradicts the original SAVE expiration set for July 1, 2028, under a prior Trump-backed bill.
The GOP states argued that SAVE was effectively a workaround for Biden’s blocked debt cancellation efforts. Key features of the plan—significantly reduced monthly payments and accelerated debt forgiveness for small balances—were central targets in the litigation.
Interest charges for borrowers in SAVE resumed four months ago, adding financial pressure to those relying on the program. Consumer groups have criticized the settlement, with Persis Yu from Protect Borrowers stating it “strips borrowers of the most affordable repayment plan.”
Currently, more than 42 million Americans carry student loan debt totaling over $1.6 trillion, per the Congressional Research Service. Borrowers affected by these changes may need to evaluate new repayment options soon to avoid unexpected financial consequences. This development marks a significant shift in federal student loan relief policy under the evolving political landscape.
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