The Trump administration has announced a proposed joint settlement with Missouri that could significantly impact millions of student loan borrowers currently benefiting from a Biden-era payment pause. Under this new proposal, borrowers enrolled in the Saving on a Valuable Education (SAVE) forbearance plan will be required to choose a new repayment option, as stated in a press release from the U.S. Department of Education on Tuesday.
The SAVE plan has been temporarily blocked since February, following a ruling from the 8th U.S. Circuit Court of Appeals. This court sided with Republican-led states that contended former President Joe Biden did not possess the authority to implement the student loan relief plan. As of July, the Education Department reported that over 7.6 million borrowers were enrolled in the SAVE forbearance program.
The proposed settlement aims to dismiss the ongoing litigation regarding the SAVE program. In exchange, the Education Department has agreed not to enroll any new borrowers in the SAVE plan and to transition all current borrowers into standard legal repayment plans. According to higher education expert Mark Kantrowitz, this change could force borrowers to exit the SAVE forbearance as early as next year, which is sooner than many had anticipated. Previously, President Donald Trump's legislation had set the expiration date for the SAVE program at July 1, 2028.
The lawsuits filed by Republican states argued that President Biden was attempting to find a workaround to forgive student debt, particularly after the Supreme Court blocked his extensive debt cancellation plan in June 2023. The SAVE plan included two critical provisions that were specifically targeted by these lawsuits: it offered lower monthly payments than any other federal student loan repayment plan and facilitated quicker debt forgiveness for borrowers with smaller balances.
The proposed settlement has drawn criticism from consumer advocates, who argue that it undermines the financial relief that borrowers have come to rely on. Persis Yu, the deputy executive director and managing counsel at Protect Borrowers, expressed concern that the agreement would deprive borrowers of the most affordable repayment option available to them.
Currently, more than 42 million Americans hold student loans, with total outstanding debt surpassing $1.6 trillion, according to the Congressional Research Service. As the proposed settlement moves forward, many borrowers are left wondering how the end of the SAVE forbearance will affect their financial situation.
If you are a borrower affected by these changes and would like to share your experience, please reach out via email to annie.nova@nbcuni.com. Your insights could contribute to a broader understanding of how the proposed settlement impacts individuals across the country.