Education Dept. Shuts Down Biden’s Student Loan Plan in Stunning Move
Education Dept. Shuts Down Biden’s Student Loan Plan in Stunning Move
It’s now official: Former President Joe Biden’s hallmark student loan repayment program is being dismantled — and millions of borrowers will soon be forced to find a new plan.
On Dec. 9, the U.S. Department of Education announced a proposed legal settlement that effectively terminates the Saving on a Valuable Education (SAVE) plan. The agreement resolves a lawsuit brought by several Republican-led states in March 2024 that sought to block the program.
If the courts approve the deal, the government will stop enrolling new borrowers in SAVE, deny all pending applications, and begin shifting current participants into alternative repayment plans. SAVE, which pegged monthly bills to borrowers’ incomes, was widely promoted by the Biden administration as the most affordable repayment option ever offered.
The settlement marks a major blow to one of Biden’s signature education policies and ends the prolonged uncertainty for more than 7 million borrowers who have been in administrative forbearance for over 18 months. Those borrowers have not been required to make payments since June of last year, though interest resumed accruing in August.
The agreement also represents what the Trump administration called the “final nail in the coffin” to Biden’s efforts to deliver nearly $200 billion in student loan relief to over 5 million Americans with crushing debt. Through the SAVE program specifically, President Donald Trump’s predecessor greenlit roughly $5.5 billion in student loan discharges to nearly half a million SAVE borrowers. SAVE also brought many borrowers’ monthly payments down to $0.
In a statement, Nicholas Kent, the education under secretary, criticized the debt cancelation made possible by Biden as an attempt to gain a “political win to prop up a failing administration.”
“The Trump administration is righting this wrong and bringing an end to this deceptive scheme,” he said. “The law is clear: if you take out a loan, you must pay it back.”
Protect Borrowers, an advocacy group for people with student debt, called the settlement a “back-room deal” that amounted to “pure capitulation.”
“The real story here is the unrelenting, right-wing push to jack up costs on working people with student debt,” Persis Yu, the organization’s deputy executive director, said in a statement.
The Education Department said SAVE borrowers will have a “limited time” to select a new repayment plan, but they can transition to other income-based programs. The agency encouraged impacted Americans to estimate their new monthly payments using tools on the Federal Student Aid website.
