ByAdam S. Minsky,
Senior Contributor.
The Trump administration announced an agreement on Tuesday to officially kill the SAVE plan for federal student loans. The announcement, included in an Education Department filing to settle an ongoing legal challenge, will result in millions of borrowers being forced into more expensive repayment plans in the coming months.
“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,” said Under Secretary of Education Nicholas Kent in a statement on Tuesday. “The Trump Administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back. 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.”
The SAVE plan, enacted under the Biden-Harris administration in 2023, offered millions of borrowers affordable monthly payments and a route to eventual student loan forgiveness. The plan was touted as the most affordable repayment plan ever, and more than eight million borrowers signed up for the program or were automatically transitioned from SAVE’s predecessor plan, REPAYE. The SAVE plan also featured a generous interest subsidy and “fast-tracked” student loan forgiveness for borrowers with smaller initial balances.
