- Trump announced a proposed settlement to officially end the SAVE student-loan repayment plan.
- If a court approves the settlement, borrowers on SAVE will have a limited time to enroll in a new plan and resume payments.
- The settlement ends over a year of litigation over the affordable repayment plan.
The door is about to permanently close on a major student-loan repayment plan.
On Tuesday, the Department of Education announced a proposed settlement with the State of Missouri, which, if approved, will officially end the SAVE student-loan repayment plan established by former President Joe Biden.
Biden rolled out the SAVE plan in July 2023, which was intended to provide student-loan borrowers with affordable monthly payments and a condensed timeline for debt relief. In April 2024, Missouri joined other GOP-led states in filing a lawsuit challenging the plan. Borrowers enrolled in the plan have been on forbearance since last summer, while the legal challenges continued.
The department said in a press release that, should the court approve the settlement, the department will not enroll any new borrowers in SAVE, deny pending applications, and move all enrolled borrowers to existing repayment plans.
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“The law is clear: if you take out a loan, you must pay it back,” Under Secretary of Education Nicholas Kent said in a statement. “Thanks to the State of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.”
If the settlement is approved, the department said that borrowers enrolled in SAVE “will have a limited time” to select a new repayment plan and begin repaying their loans. The department and federal servicers are expected to reach out to SAVE borrowers in the coming months with more information.
Trump’s administration has indicated its intent to end the SAVE plan for months, with a phase-out of the plan by 2028. The announcement of this proposed settlement accelerates that timeline. On August 1, the Department of Education resumed interest charges on SAVE borrowers’ accounts, and the Education Sec. Linda McMahon said at the time that she recommended borrowers transition to “a legally compliant repayment plan,” like income-based repayment.
The department is working to carry out changes to expand eligibility for income-based repayment, like removing the requirement to have partial financial hardship, which is set to be completed in December 2025. The “big beautiful” spending legislation that Trump signed into law also included plans to eliminate SAVE and introduce two repayment options for borrowers, effective July 2026.
It’s unclear when these changes will take effect. However, borrowers who leave SAVE will likely face higher monthly payments should they enroll in a different plan.
