Education Department Scraps Biden-era SAVE Plan, Forcing 7M Borrowers into Costlier Repayments
The U.S. Department of Education announced December 9, 2025, that it will dismantle the SAVE Plan — the income-driven student loan repayment program launched under the Biden administration. In a settlement with Missouri and six other Republican-led states, the department pledged to halt new SAVE enrollments, deny any unfinished applications, and transfer all existing SAVE borrowers into other federally approved repayment plans.
At the time of the agreement, approximately 7 million borrowers were enrolled in SAVE. Earlier estimates, including from SAVE’s own administrators had placed the number closer to 7.6 million. The SAVE plan, touted as the most affordable repayment program ever offered, capped monthly payments at a fixed portion of income and, for some, promised eventual loan forgiveness.
The settlement follows months of legal challenges, including an injunction from the Eighth U.S. Circuit Court of Appeals, which ruled that the plan exceeded executive authority without congressional approval. Education Secretary under the new administration, Nicholas Kent, called SAVE an “illegal” scheme and framed its end as “righting a wrong” for “taxpayers who never took a loan.”
For many borrowers, the move ends a long period of limbo. Under a previous court ruling, SAVE had been put into forbearance — payments paused, interest frozen — while litigation played out. Interest resumed August 1, 2025, but borrowers hadn’t yet been required to make payments. Under the settlement, that grace period ends. Those affected will need to select alternative repayment plans such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Income-Contingent Repayment (ICR), plans that generally impose higher payments and may not offer the same benefits.
The transition will not be automatic; borrowers will have a limited window to choose a new plan once the court approves the settlement. For now, the Education Department recommends using its Loan Simulator tool to explore options and estimate monthly payments. The change raises concerns that many borrowers soon could face significantly higher payments. A move that may exacerbate financial stress among graduates and households carrying heavy student debt.
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