The Trump administration announced a proposed joint settlement with Missouri that could end the Biden-era student loan payment pause for millions of borrowers.
Under the plan, borrowers currently enrolled in the Saving on a Valuable Education (SAVE) forbearance would be required to choose a new repayment option. The Department of Education said the settlement would dismiss the ongoing SAVE litigation in exchange for moving all current participants into legal repayment plans and halting enrollment of new borrowers.
The SAVE program, which was blocked by the 8th U.S. Circuit Court of Appeals in February, had offered lower monthly payments and faster debt forgiveness for borrowers with smaller balances. As of July, over 7.6 million borrowers remained in the program. Higher education experts say the settlement could force participants to exit SAVE earlier than expected, potentially as soon as early next year, rather than the previously scheduled expiration in 2028.
Republican-led states had challenged the program, arguing it circumvented the Supreme Court’s rejection of broader student debt forgiveness. Four months ago, the Education Department resumed charging interest on loans for borrowers still in the SAVE forbearance.
Consumer advocates criticized the settlement, saying it would remove one of the most affordable repayment options for borrowers. Currently, over 42 million Americans hold student loans, with total debt exceeding $1.6 trillion.