The Trump administration announced a joint settlement ending Biden’s flagship student debt relief program, ending more than a year of legal limbo for borrowers.
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WASHINGTON – It’s official: Former President Joe Biden’s signature student loan forgiveness plan is over. And millions of borrowers are on the verge of enrolling in another program.
On December 9, the Federal Ministry of Education announced a draft legal agreement aimed at abolishing the program known as the Savings for Valuable Education (SAVE) scheme. The agency announced in March 2024 that it had reached a settlement with several red states that had filed suit seeking to halt SAVE.
If approved by the court, the settlement would require new borrowers to enroll in the SAVE program. The program, with monthly charges based on a borrower’s income, has been hailed by the Biden administration as the most affordable student loan repayment option in history. The department also plans to deny pending SAVE applications and move current borrowers to alternative repayment plans.
The settlement marks the death knell for one of Biden’s major education policy achievements, ending a legal logjam that has left more than 7 million SAVE borrowers stuck for more than a year and a half. These borrowers have been administratively suspended from making payments since June last year. Interest on their loans resumed in August this year.
The agreement also represents what the Trump administration called “the final nail in the coffin” for Biden’s efforts to provide about $200 billion in student loan relief to more than 5 million indebted Americans. Specifically, through the SAVE program, former President Donald Trump greenlit nearly $5.5 billion in student loan repayments to nearly 500,000 SAVE borrowers. SAVE also lowered monthly payments to $0 for many borrowers.
In a statement, Education Undersecretary Nicholas Kent criticized the debt relief made possible by Biden as an attempt to score “a political victory to prop up a failed administration.”
“The Trump administration is righting this wrong and putting an end to this deceptive scheme.” “The law is clear: If you take out a loan, you have to pay it back.”
Protect Borrowers, an advocacy group for people with student debt, said the settlement was a “backroom deal” that amounted to “pure surrender.”
“The real story here is relentless right-wing pressure to raise costs for working people with student debt,” Persis Yu, the group’s deputy executive director, said in a statement.
The Department of Education said SAVE borrowers have “limited time” to choose a new repayment plan, but they can move to other income-based programs. The agency encouraged affected Americans to use a tool on the federal student aid website to estimate their new monthly payments.
Zachary Schermele is a Congressional reporter for USA TODAY. You can email us at zschermele@usatoday.com. Follow him on X at @ZachSchermele and on Bluesky at @zachschermele.bsky.social..
