Instead of setting monthly payments based on income, use the SAVE program rules They tell them how much borrowers earn and the size of their families, which is referred to as the income-based repayment option, or IDR. The SAVE program cut the monthly loan payments for most enrollees in half and left 4.5 million of them, mostly those earning between 150-225% of the federal poverty level, paying $0 a month.
In March 2024, a coalition of 11 states led by Kansas Attorney General Kris Kobach filed a lawsuit in federal court to stop the SAVE plan. The following month, a similar lawsuit was filed by another seven-state coalition led by former Missouri Attorney General Andrew Bailey.
In February, the 8th Circuit Court of Appeals ruled in favor of the states, blocking 8 million borrowers from accessing lower payments under the program. Now President Donald Trump’s administration, which staunchly opposes student loan forgiveness, has agreed to settle the lawsuit, effectively killing SAVE.
“For four years, the Biden administration sought to illegally transfer student loan debt to American taxpayers, many of whom did not take out a loan to fund their post-secondary education or even went to college themselves, simply to score a political win to support a failed administration,” Education Undersecretary Nicholas Kent said. “The Trump administration is righting this wrong and putting an end to this deceptive scheme. The law is clear: If you get a loan, you must repay it.”
The settlement also includes a provision that, over the next 10 years, the Department of Education must notify the state of Missouri at least 30 days before beginning broad student debt relief.
As a debt association, an association of debtors on a membership basis, He explained In a social media post: “30 days is enough to let Missouri know they’ll find a place to sue for a relief before it happens. So, not only has Trump invalidated the Savings Plan, they’re essentially enforcing a moratorium on rescission for the next 10 years with this agreement.”
“What Republicans acknowledge is that the executive administration has the authority to cancel federal student debt,” the group added. “They just want to make it so that it is administratively and practically impossible to hand it over because of this technology. It’s theft in advance.”
SAVE was already scheduled to expire in 2028 after Republicans passed the Big Beautiful Bill Act in July, which replaced it with a pair of Less generous Income-based repayment plans that require many debtors to pay hundreds more per month. The deadline to switch to one of the new plans will now be moved up, although the administration has not yet clarified when borrowers will have to switch.
Debt group anticipation The end of SAVE “means that many debtors will likely have to default on their loans,” which the group added “is bad for millions of families and our economy.”
According to analysis From federal student loan data from the American Enterprise Institute, a libertarian think tank, more than 12 million borrowers in the United States are already behind on or delinquent on their student loan payments.
Since their introduction, former President Joe Biden’s student loan forgiveness policies have been chipped away bit by bit through litigation. In 2023, the conservative US Supreme Court struck down the administration’s plans to forgive up to $20,000 in student loan debt for millions of Americans, ruling that the plan exceeded the administration’s executive authority. A year later, it also suspended SAVE while it considered the merits of Missouri’s lawsuit.
Borrower Protection Group, which supports student loan forgiveness, He argues SAVE is “not a new use of executive power,” noting that Congress gave the Department of Education the authority to create IDRs in 1993 and that many other programs have been created since then.
“This settlement is a pure surrender, going far beyond what the lawsuit or the Eighth Circuit order requires,” said Persis Yu, deputy CEO and managing counsel of the group. “The real story here is the ongoing right-wing push to raise costs on workers with student debt.”
A survey conducted by Data for Progress in September Found Student loans are making it difficult for many borrowers to keep up with other bills amid the growing cost-of-living crisis: 42% of respondents said their debt payments have had a negative impact on their ability to pay for food or housing. More than a third, 37%, said it had a negative impact on their ability to cover health care costs for themselves or their dependents, while a majority, 52%, said it had a negative impact on their ability to save for retirement.
“As millions of student loan borrowers struggle amid a worsening affordability crisis as rising grocery, utility and health care costs continue to bury families in debt, billionaire Education Secretary Linda McMahon has chosen to make a behind-the-scenes deal with the state’s right-wing attorney general and strip borrowers of an affordable repayment plan that would help millions stay on track to repay their loans while keeping a roof over their heads,” Yu said.
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