A proposed legal settlement between the U.S. Department of Education and the State of Missouri could bring an abrupt end to the Biden-era Saving on Valuable Education (SAVE) income-driven repayment plan, leaving more than seven million borrowers facing another major transition in the federal student loan system.
The Department announced Tuesday that it had reached an agreement to settle Missouri’s lawsuit challenging SAVE — one of the most generous repayment plans ever offered, with some borrowers qualifying for $0 monthly payments and accelerated forgiveness after as few as 10 years. The plan has been under legal scrutiny since its rollout, prompting the agency to place borrowers into administrative forbearance while the courts considered the case.
Now, under the proposed settlement, the Department would stop enrolling new participants, deny pending applications, and move all current SAVE borrowers into other “legal repayment plans.” The agreement still requires court approval.
Trump administration officials framed the move as a necessary correction, casting SAVE as an illegal expansion of executive authority. In a press release, Under Secretary of Education Nicholas Kent said, “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.” He added, “The Trump Administration is righting this wrong and bringing an end to this deceptive scheme.”
Missouri Attorney General Catherine Hanaway offered a similar critique, saying, “Our Office fought for hardworking Americans who were being preyed upon by Biden Administration bureaucrats, and we won in court every time.”
Borrower advocates, however, described the settlement as destabilizing and harmful for millions of people who have already endured years of shifting repayment rules. Natalia Abrams, president and founder of the Student Debt Crisis Center, called the announcement “devastating for the nearly 8 million student loan borrowers who depended on the SAVE plan to keep their payments affordable.” In her statement, she added, “Borrowers have endured years of uncertainty, and this only exacerbates the confusion and financial strain they are already facing.”
The Center also pointed to internal challenges at the Department of Education, noting that reductions in force have created processing delays and backlogs for income-driven repayment (IDR) applications. Ending SAVE now, they argue, without a clear and orderly transition plan, “makes the Department of Education complicit in deepening the affordability crisis in America.”
If approved, borrowers in SAVE will have only a limited window to select a new repayment plan before they are moved automatically. The Department has directed borrowers to its Loan Simulator tool and says outreach will begin in the coming weeks. It also emphasized that a new IDR option created under the One Big Beautiful Bill Act — the Repayment Assistance Plan (RAP) — will be available by July 2026, though it requires 30 years of repayment before forgiveness.
The settlement would also cement Republicans’ broader rollback of Biden-era relief measures. Earlier legislation passed by GOP lawmakers already slated SAVE to sunset by 2028 and reduced the number of repayment plan choices available.
For borrowers, the settlement represents yet another shift in an already volatile repayment landscape. While the Trump administration argues that ending SAVE restores legal boundaries, millions of borrowers may soon face higher payments, limited protections, and fewer pathways to timely loan forgiveness — all during a period of widening financial strain.
