Education Department moves to end SAVE under legal settlement

ADA previously expressed support for income-driven repayment plan 

The U.S. Department of Education announced it has reached a proposed legal settlement that would formally end the Saving on Valuable Education, or SAVE, income-driven repayment plan, a signature Biden-era policy that had offered some of the lowest monthly student loan payments and fastest potential paths to forgiveness in the federal system.

The agreement, which still requires court approval, would resolve litigation brought by a coalition of Republican-led states challenging the administration’s authority to implement the plan. Introduced in 2023, SAVE had lowered payments for many borrowers and provided the possibility of loan forgiveness after as few as 10 years for qualifying low-balance borrowers.

The ADA has previously lauded the agency for creating SAVE, highlighting the fact that the income-driven repayment plan uses a smaller portion of a borrower’s adjusted gross income to calculate their monthly student loan payment.

“Moreover, it prevents the borrower’s balance from growing due to unpaid interest — by eliminating any remaining monthly interest after the borrower makes each full scheduled payment,” the ADA said last year.

According to the Education Department, more than 7 million borrowers currently enrolled in SAVE would be required to transition to alternative repayment plans. Officials said borrowers would be given a limited window to select a new income-driven repayment option before being reassigned. Those borrowers have remained in forbearance for more than a year while the lawsuit proceeded.

The move comes as the Trump administration advances broader reforms to the federal student loan system. Congressional Republicans have already approved legislation that would eliminate SAVE by 2028 and consolidate repayment options into two choices: a standard repayment plan lasting 10 to 25 years, or the Repayment Assistance Plan, which would require 30 years of payments before forgiveness becomes available.

If the court signs off on the settlement, the Education Department said it will issue detailed guidance for borrowers in the coming months outlining timelines, new repayment options and the process for transitioning out of the SAVE plan.