WASHINGTON — The U.S. Department of Education has introduced a proposed agreement to end a student loan repayment plan that supports over 7 million borrowers. This agreement, in collaboration with seven Republican-led states, aims to cease new enrollments in the Saving on a Valuable Education (SAVE) plan, reject ongoing applications, and transition current participants into legally compliant plans. Initially launched in 2023 during President Joe Biden’s term, the plan faced legal opposition from GOP-led states like Missouri, seeking to offer reduced loan payments and debt forgiveness over time.
Should the Missouri federal court endorse this agreement, borrowers currently in the SAVE plan will have a limited period to choose a new repayment option and resume loan payments. This legal challenge was spearheaded by Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma in 2024. Under Secretary of Education Nicholas Kent expressed support for the Trump administration’s decision, describing the plan as a “deceptive scheme” that misled taxpayers.
Kent stated, “The law is clear: if you take out a loan, you must pay it back,” commending Missouri and other states for resisting the federal initiative. Missouri Attorney General Catherine Hanaway also emphasized the importance of protecting taxpayers from what she termed as predatory policies by the Biden Administration. Meanwhile, student advocates warn this move could burden borrowers amid rising living costs.
Persis Yu from Protect Borrowers criticized the settlement as a setback for borrowers, accusing the agreement of stripping them of beneficial plans. Yu stated, “While millions of student loan borrowers struggle amidst the worsening affordability crisis … billionaire Education Secretary, Linda McMahon chose to strike a back-room deal with a right-wing state Attorney General.”
In February, a federal appeals court upheld an injunction blocking the SAVE plan, resulting in an interest-free forbearance for borrowers, which ended on August 1 as interest began accruing again. The SAVE plan was already scheduled to phase out by July 2028 due to a tax and spending cut bill signed by Trump. More details on the plan can be found in the official proposal document.
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