The U.S. Department of Education has reached a settlement that would effectively end the Biden-era push for student loan forgiveness.
The “Saving on A Valuable Education” repayment plan was President Joe Biden’s last-ditch effort to deliver on a key campaign promise after the Supreme Court struck down his plans in June 2023.
Several GOP states sued the department over it, and the SAVE plan was put on hold during that litigation.
After President Donald Trump took office again, his heavily stripped-down Education Department announced it would look to drop the loan forgiveness efforts.
On Tuesday, the agency announced the settlement, which must be approved by a judge. The agreement is between the department and the state of Missouri, the lead plaintiff, but would apply to the entire program.
Nearly eight million borrowers could be affected.
SAVE was meant to replace the old income-driven repayment plan, significantly lowering the minimum amount due on many student loans. For many, their monthly payment would have been halved or even eliminated, Biden had contended.
Under the old plan, borrowers had to pay at least 10% of their discretionary income, which meant anything they earned above 150% of the federal poverty line. Under SAVE, they would have only paid what they earned above 225% of the poverty line.
SAVE also would not have required those unemployed or making less than $30,000 annually to make any minimum payments.
“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. “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.”
Deputy Executive Director and Managing Counsel Persis Yu of Protect Borrowers, a nonprofit student loan borrower advocacy group, slammed the government’s move in a statement:
While millions of student loan borrowers struggle amidst the worsening affordability crisis—as the rising costs of groceries, utilities and healthcare continue to bury families in debt, billionaire Education Secretary, Linda McMahon chose to strike a back-room deal with a right-wing state Attorney General and strip borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head.
Those enrolled in SAVE will have a limited amount of time to select a new repayment plan. The Education Department said it will reach out to borrowers directly about next steps.
Erum Salam is a breaking news reporter for MS NOW, with a focus on how global events and foreign policy shape U.S. politics. She previously was a breaking news reporter for The Guardian.