The Trump administration has reached a deal with Missouri and several other Republican-led states to shut down President Joe Biden’s signature student-loan repayment program known as SAVE, or Saving on a Valuable Education.
Education Under Secretary Nicholas Kent accused the Biden administration of trying to transfer the burden of student loan debt to taxpayers in order to score political points.
“The law is clear: if you take out a loan, you must pay it back,” he said.
More than 7 million borrowers were enrolled in the plan, which aimed to make monthly payments more affordable. It lowered payments for many to as little as $0 and cut required payments on undergraduate loans by half.
Some borrowers with smaller balances even qualified for early forgiveness.
Court Settlement Would Permanently Halt SAVE
But the program, praised by supporters as one of the most generous in U.S. history, was also the target of multiple lawsuits.
Republican states argued the Biden administration overstepped its authority by offering the plan without congressional approval. The SAVE program had already been put on hold earlier this year by the 8th U.S. Circuit Court of Appeals.
Now, a proposed court settlement would permanently end it. The Education Department said it will stop accepting new applications, reject pending ones, and move current SAVE borrowers into other repayment plans.
Borrowers will get a limited window to choose a new option before being automatically transitioned, according to NBC News.
Trump Officials Say Plan Was Unlawful
Kent said, “For four years, the Biden administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing administration.”
He also added, “The Trump administration is righting this wrong and bringing an end to this deceptive scheme.”
Missouri Attorney General Catherine Hanaway, whose state led the lawsuit along with Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma, praised the outcome.
“We appreciate President Trump’s real, long-term solutions instead of illegal student loan schemes,” Hanaway said in a joint press release with the Education Department.
“Unilaterally saddling taxpayers with someone else’s Ivy League debt ignored congressional authority and was clearly unlawful.”
Borrower Advocates Call Move ‘Devastating’
Advocacy groups slammed the move as harmful to struggling borrowers, according to The Guardian.
For many borrowers, the SAVE plan offered a critical financial lifeline. Without it, millions could face significantly higher monthly payments, increased risk of default, and deeper financial strain.
Young graduates just entering the workforce, low-income earners, and those already struggling to make ends meet may find themselves forced to choose between repaying loans or covering essential living costs.
The sudden change adds uncertainty and stress to an already vulnerable population.
“Today’s decision from the Department of Education is devastating for the nearly 8 million student loan borrowers who depended on the SAVE plan to keep their payments affordable,” said Natalie Abrams, president of the Student Debt Crisis Center.
“Borrowers need real relief and stability, not a return to unaffordable, costly student loan payments that push them closer to financial crisis.”
Persis Yu, deputy executive director of Protect Borrowers, said the settlement amounts to a “back-room deal with a right-wing state attorney general” that will strip away the most affordable repayment option during a worsening affordability crisis.
Next Steps for Borrowers
The Education Department says it will begin reaching out to affected borrowers with instructions in the coming weeks.
Over 43 million Americans currently owe a collective $1.6 trillion in federal student loans.
According to the American Enterprise Institute, 12 million borrowers are behind on their payments, including 5.5 million in default.
The proposed settlement still needs approval from a federal judge in Missouri before it goes into effect.