Key Highlights
- The Trump administration is moving to end the Biden-era SAVE student loan plan.
- Linda McMahon, Education Secretary, has stated that American taxpayers will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.
- The Department of Education’s proposed joint settlement with Missouri aims to terminate the program impacting over 7 million borrowers.
- Student loan advocates warn that the move could result in higher monthly payments for borrowers.
Background on the SAVE Plan and Its Termination
The Biden administration’s Student Loan Forgiveness initiative, known as the Saving on a Valuable Education (SAVE) plan, has been a significant policy during its tenure. This program was designed to ease the financial burden of student loans by offering flexible repayment options based on income and family size. It particularly targeted those earning $16 an hour or less, providing them with zero monthly payments towards their debt.
However, this initiative faced legal challenges from several Republican-led states, including Missouri, which led to a federal appeals court blocking the program in 2024. The Trump administration’s Education Department saw this as an opportunity to dismantle what they termed a “deceptive scheme” and has now announced its plans to terminate the SAVE plan entirely.
Official Statements and Reactions
In a release from the department, Under Secretary of Education Nicholas Kent emphasized that the law is clear: borrowers must repay their loans. He stated, “The law is clear: if you take out a loan, you must pay it back.” The department highlighted that this move would ensure American taxpayers are no longer obligated to serve as collateral for what they deemed irresponsible student loan policies. Education Secretary Linda McMahon, known for her vocal criticism of student loan forgiveness, has been at the forefront of these efforts.
She wrote on X, “The Biden Administration’s illegal SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years. We won’t tolerate it.”
Impact and Controversies
While the termination of the SAVE plan may bring some relief to taxpayers, it has raised concerns among advocates who argue that millions of borrowers will face increased monthly payments. Michele Zampini, associate vice president of federal policy & advocacy at The Institute for College Access & Success (TICAS), expressed these worries, stating, “The 7+ million borrowers enrolled in SAVE will face higher monthly loan payments—and may lose out on months of progress toward loan forgiveness.”
Persis Yu, Protect Borrowers Deputy Executive Director and Managing Counsel, added that this settlement represents a significant capitulation. She said, “This settlement is pure capitulation—it goes much further than the suit or the 8th Circuit order requires.” Yu emphasized that the move strips borrowers of their most affordable repayment plan, which was crucial for staying on track with loan payments.
The news comes at an interesting juncture where Trump’s One Big Beautiful Bill Act includes provisions to terminate current student loan repayment plans for loans disbursed after July 1, 2026. This act will replace existing plans with two separate options: a standard repayment plan and the new Repayment Assistance Plan (RAP). Overall, this move by the Trump administration highlights ongoing political disagreements over student debt relief policies, with significant implications for millions of Americans facing financial strain due to their education loans.