Trump Moves to Shut Down SAVE Student Loan Plan, Leaving Millions in Uncertainty
The biggest student loan story right now is the Trump administration’s move to shut down the SAVE repayment plan — a program that had become a lifeline for more than 7 million borrowers. And the way this is unfolding has created a wave of confusion, anxiety, and financial uncertainty for people who were depending on it.
The SAVE plan, introduced under President Biden, was promoted as the most affordable repayment option ever. It tied monthly payments to income, offered $0 payments for low-income earners, and even protected borrowers from ballooning interest if they stayed on track. On top of that, it included a faster route to loan forgiveness, especially for people who borrowed smaller amounts and had been repaying for years. Many borrowers saw dramatic reductions in their monthly bills, and in its early months, hundreds of thousands had their remaining balances forgiven entirely.
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But conservative states — led by Missouri — argued that the Biden administration went too far, calling SAVE an unlawful expansion of federal power. Those states sued, and while the legal fight dragged on, the program was essentially frozen. Millions of borrowers were placed into a temporary administrative forbearance, meaning payments were paused and interest wasn’t growing, but they also couldn’t switch easily into other plans because much of the system was tied to SAVE’s infrastructure.
Now, through a proposed settlement with those states, the Trump administration has moved to terminate SAVE completely. Officials, including Education Secretary Linda McMahon, framed the decision as a correction of what they see as “illegal and irresponsible” student loan policies. Their position is that taxpayers should not be responsible for forgiving debt borrowed by others. As Under Secretary Nicholas Kent put it, “If you take out a loan, you must pay it back.”
For borrowers, though, this shift lands hard. Advocacy groups warn that millions will see their payments rise, and some may lose progress toward eventual loan forgiveness. The transition itself could be chaotic — loan servicers will now need to move millions of people into new repayment plans, and the timeframe for doing this still hasn’t been clearly spelled out. Borrowers will get only a limited window to choose a new, legally compliant plan.
And all of this comes before an even bigger system overhaul arrives. Starting in 2026, under the One Big Beautiful Bill Act, only two repayment options will exist for new loans: a standard plan and a new income-based plan called the Repayment Assistance Plan. SAVE and other existing income-driven plans will be phased out entirely for future borrowers.
For now, the biggest concern shared by experts is simple: millions of Americans are already struggling with their student loans, and removing the most affordable plan could push many closer to delinquency or even default. The coming months will be crucial as borrowers wait for clear instructions and brace for higher payments in an already strained economy.
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