Millions of student loan borrowers who had their monthly payments reduced to as low as $0 under a certain program might be compelled to switch to new repayment plans and start paying off their loans again, as the Trump Administration is taking steps to end the program.
The Department of Education announced this week that it had reached an agreement with the state of Missouri to terminate the Saving on Valuable Education (SAVE) plan, which has adjusted monthly payments for over 8 million Americans—including approximately 7 million borrowers currently enrolled—based on their income and family size.
Under the agreement, which still requires court approval, the department stated that it would not enroll new borrowers in the program, and current SAVE enrollees would be given a “limited time” to find a new plan to repay their loans.
The Trump Administration argued that SAVE—which Missouri and other states challenged in a lawsuit, contending it was too generous—is “illegal” and would have cost taxpayers, including those who didn’t attend college or already paid off their own student loans, more than over ten years.
“The law is clear: if you take out a loan, you must pay it back,” said Under Secretary of Education Nicholas Kent in a statement accompanying the announcement. “Thanks to the State of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now be assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.”
The Education Department said it would offer support to borrowers currently enrolled in SAVE as they select a “legal repayment plan that helps put them on the path to a sustainable financial future while safeguarding the interests of American taxpayers.” Impacted borrowers will be contacted in the “coming weeks” to receive assistance in obtaining a new plan, the department said.
Here’s what to know about the SAVE plan and how borrowers would be affected by its end.
What is the SAVE plan?
The Biden-Harris Administration launched the plan in August 2023, calling it the “Most Affordable Student Loan Repayment Plan Ever to Lower Monthly Payments for Millions of Borrowers.”
The plan aimed to halve payments for undergraduate loans, reduce many borrowers’ monthly payments to $0, and provide early forgiveness for borrowers with low original loan amounts. The plan enabled 4.6 million of the more than 8 million borrowers who enrolled in the program to have their payments reduced to $0, according to advocacy group Protect Borrowers.
The popular plan has faced legal opposition, however, and has been blocked for months. In a ruling this February, a federal court sided with the Republican-led states that challenged the SAVE program, finding that they were likely to succeed in their argument that implementing the plan exceeded the Education Secretary’s authority. The decision upheld a preliminary injunction against the program previously issued by a lower court last summer.
After that earlier judgment, the Biden-era Education Department had placed borrowers enrolled in the program on hold amid the ongoing legal battle. But this July, the department announced it would stop interest accrual for borrowers on Aug. 1 to comply with the federal injunction. Education Secretary Linda McMahon also encouraged borrowers to transition to other repayment plans at the time, saying SAVE enrollees “cannot access important loan benefits and cannot make progress toward loan discharge programs authorized by Congress.”
The Big Beautiful Bill, which President Donald Trump signed into law in July, gave borrowers enrolled in SAVE and other student loan programs that are being eliminated until a certain time to find a new plan.
Protect Borrowers Deputy Executive Director Persis Yu said in a statement on Tuesday that SAVE’s elimination would “strip borrowers of the most affordable repayment plan that would help millions stay on track with their loans while keeping a roof over their head.”
Kent, the Education Department official, and Missouri Attorney General Catherine Hanaway wrote in an op-ed published in the Wall Street Journal on the same day of the department’s announcement that the “Administration isn’t blind to the mounting student debt burden or the skyrocketing costs of a college degree. But we refuse to force hardworking Americans to bear the burden of loans that aren’t theirs.”
What would the end of the program mean for borrowers?
If the agreement to end the SAVE program is approved by the court, the approximately 7 million borrowers currently enrolled in SAVE would have to find a new plan and start repaying their student loans.
All pending applications to the program would also be rejected, and no new borrowers would be enrolled.
The Education Department advised borrowers to use a Federal Student Aid calculator to estimate their monthly payment amount, determine their eligibility for repayment options, and choose a new plan that suits their goals and needs.
What plans could current SAVE Plan enrollees move to?
Borrowers can enroll in another Income-Driven Repayment (IDR) plan as an alternative to SAVE—although some other IDR plans are also being phased out under the Big Beautiful Bill.
One option is an Income-Based Repayment plan. This plan uses borrowers’ discretionary income—or the difference between their annual income and 150% of the federal poverty guideline for their state and family size—to determine their monthly payment amount. That amount is generally set at 10% of discretionary income, divided by 12, for people who borrowed after July 1,