The Trump administration announced on December 9, 2025, that it had reached a settlement with Missouri to end the Biden-era SAVE student loan repayment plan, forcing about seven million borrowers out of their current payment pause.
The US Department of Education will stop enrolling new borrowers in SAVE and transition existing ones to other repayment options, likely starting early next year. This move resolves ongoing court battles that halted the plan earlier this year.
Education Secretary Linda McMahon stated the department lacks authority for SAVE and called for borrowers to switch to “legal repayment plans” like the Income-Based Repayment plan.
The SAVE program, meant to lower payments and speed forgiveness, faced lawsuits from Republican states claiming it bypassed Congress after the Supreme Court blocked broader debt relief in 2023. Courts paused payments and accrual interest for participants since February.
Roughly 7.6 million borrowers remain in the SAVE forbearance, where no payments were due. Interest resumed in August 2025, but now full repayment looms. Advocates worry this leaves borrowers vulnerable, with Persis Yu of Protect Borrowers calling it a plan to “strip affordable options” as many struggle post-pause. Over 42 million Americans hold $1.6 trillion in federal student debt, and 42% report payment hardships.
The settlement accelerates SAVE’s end, originally set for 2028 under the Republican “One Big Beautiful Bill.” Borrowers have a “limited time” to select new plans, or servicers may assign one automatically. The Education Department urged quick action to avoid default risks. Earlier pauses helped millions, but critics say the shift burdens low-income families.
This decision marks a shift from Biden policies, focusing on existing plans without new forgiveness. Student loan servicers expect transitions next year, amid backlogs in applications.
Borrowers like teachers and public servants pursuing forgiveness under programs like PSLF must adapt quickly. The change affects federal loans nationwide, prompting calls for congressional fixes from both sides.
