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- The Trump administration announced an agreement to officially end the SAVE student-loan repayment plan.
- If approved, the settlement would require enrolled borrowers to move to a different plan and restart payments.
- SAVE borrowers would likely face higher payments under a new plan.
It's looking like SAVE can't be saved — and it'll mean millions of borrowers could soon face higher monthly payments.
On Tuesday, President Donald Trump's Department of Education announced a settlement with the State of Missouri to officially end the SAVE student-loan repayment plan.
Since last summer, SAVE — created by former President Joe Biden — has been paused due to litigation from Missouri and other GOP-led states. The plan was designed to provide affordable monthly payments to the 7 million enrolled borrowers, along with a shorter timeline for loan forgiveness.
If a court approves the settlement, the department will stop accepting new applications to SAVE, require borrowers to transfer to an existing plan, and resume payments.
The Trump administration is "bringing an end to this deceptive scheme," Nicholas Kent, the undersecretary of education, said in a statement. "The law is clear: if you take out a loan, you must pay it back."
The next steps for the SAVE student-loan repayment plan
The proposed settlement is pending court approval, and borrowers will not face any changes until the court finalizes it. If the settlement is approved, borrowers will have "a limited time" to select a new repayment plan and resume repayment.
In addition to the 7 million borrowers enrolled in SAVE, the Department of Education said that 450,000 borrowers have "expressed interest in enrolling in the plan" and will be affected by the settlement, as well.
The proposed settlement said that the department would deny pending applications and help borrowers transition out of SAVE, and it would undergo negotiated rulemaking — which includes negotiations with stakeholders on the department's proposal — to effectuate the settlement.
The department did not provide a timeline for the negotiated rulemaking process.
Carolyn Fast, the director of higher education policy at the left-leaning think-tank The Century Foundation, told Business Insider that borrowers who transition out of SAVE will likely face higher monthly payments. She referred to the Repayment Assistance Plan, a new plan the department is set to launch in July 2026, which would allow for loan forgiveness after 30 years.
"It is less generous in terms of monthly payments, and also to the extent that you have to be in the program longer before you can get forgiveness," Fast said.
While the department resumed interest charges on SAVE plan accounts in August, enrolled borrowers previously had until 2028 to transition to a new plan. This proposed settlement accelerates that timeline, and it would be a significant undertaking for servicers to carry out, Fast said.
Abby Shafroth, managing director of advocacy at the National Consumer Law Center, said that eliminating SAVE "without access to a clear and affordable alternative is reckless and short-sighted, creating even more needless confusion, uncertainty, and financial stress for millions of Americans already struggling with the rising cost of living."
"In the midst of a national affordability crisis, their way forward is murky and complicated," she said.
