Federal officials said Tuesday that the Education Department has negotiated a settlement in a long-running lawsuit that would bring the Biden-era Saving on Valuable Education income-driven repayment plan to an end.
The SAVE program was introduced as a major overhaul of repayment rules, offering sharply reduced monthly bills for millions of borrowers and the possibility of forgiveness for some after a decade of payments. Republican attorneys general from several states sued soon after its rollout, arguing the program reached far beyond the limits of federal statute, according to The Hill.
Under the settlement, the department would close the SAVE plan and direct borrowers toward other repayment structures once a court gives final approval.
“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. Thanks to the State of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies,” Kent added.
More than seven million borrowers currently enrolled would be required to choose a new income based plan during a temporary transition period. They have remained in forbearance since litigation began over a year ago.
“Today’s decision from the Department of Education is devastating for the nearly 8 million student loan borrowers who depended on the SAVE plan to keep their payments affordable,” said Natalia Abrams, who warned that ending the program increases financial pressure and uncertainty for affected borrowers.
