Over 7 Million Borrowers Face Higher Bills as Education Dept. Winds Down SAVE Repayment Plan

More than 7 million federal student loan borrowers now need to plan for new repayment arrangements after the Department of Education announced it will begin winding down the Saving on Valuable Education (SAVE) income-driven repayment program. SAVE — widely viewed as the most generous IDR plan created under the Biden administration — was challenged in court by a coalition of Republican-led states. The Education Department said it would move borrowers into a different repayment option it considers legally defensible once the settlement is finalized.

What Changed and Who's Affected

The settlement between the states and the Education Department still requires court approval and does not set a firm date for when SAVE will end. Under SAVE, some borrowers could pay as little as $0 per month and qualify for forgiveness after 10 years of qualifying payments. Those protections are now in flux, and many borrowers should expect higher monthly bills if moved to other repayment plans.

Immediate Practical Impacts

• Forbearance and Interest: Many SAVE borrowers have been in a form of administrative forbearance due to the legal challenge. Interest charges have been restored for some borrowers, but exact repayment timelines remain uncertain.
• Repayment Changes: The Education Department says it will transition borrowers to a different “legal” repayment option after the settlement is finalized. Borrowers are advised to review alternatives now using the department’s loan simulator.
• Budget Preparation: Advocates urge borrowers to estimate likely future payments now so they can adjust household budgets and avoid surprises when forbearance ends.

Legal And Policy Consequences

The settlement contains provisions with potential long-term effects on federal student debt policy. Notably, the agreement requires the Education Department to notify the state of Missouri 30 days in advance if it plans to cancel more than $10 billion in loans over the next decade — a process that would give the state time to mount legal challenges. Advocates warn that provision could limit future administrations’ ability to pursue large-scale debt cancellation.

“For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers...simply for a political win to prop up a failing Administration,”

Other Policy Shifts Borrowers Should Watch

• Repayment Options Narrowed in 2028: Legislation passed earlier this year will reduce repayment choices beginning in 2028 to two main plans: a standard plan (10–25 years) and a Repayment Assistance Plan (up to 30 years, with forgiveness after that period).
• PSLF Eligibility Tightened: A final rule has revised who qualifies as an eligible employer under Public Service Loan Forgiveness, narrowing the pool of organizations that count toward the 10-year forgiveness track.
• Potential Agency Move: The administration has signaled interest in moving the federal student loan portfolio out of the Education Department to another agency such as the Treasury Department or the Small Business Administration.

What Borrowers Should Do Now

Advocates recommend borrowers take proactive steps:

• Use the Department of Education’s loan simulator to compare repayment plans and estimate monthly payments.
• Contact your loan servicer to clarify your current status, interest accrual, and whether you are in forbearance.
• Build a short-term budget that anticipates higher payments, and explore income-driven plans or consolidation if they may lower monthly costs.
• Follow the legal settlement closely—timelines and details may change if the courts modify or delay the agreement.

Advocates and borrowers alike say the coming months will be uncertain as the settlement moves through the courts and as rulemaking and legislative changes continue to reshape the federal student loan landscape.

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