The U.S. Department of Education announced in a press release Tuesday that an illegal student loan program put forth by the Biden administration is now dead.
The full press release reads as follows:
Today, the U.S. Department of Education announced a proposed joint settlement agreement with the State of Missouri that would end the Biden Administration’s illegal ‘Saving on a Valuable Education’ (SAVE) Plan. The SAVE Plan was the Biden Administration’s third and final attempt at mass federal student loan forgiveness, and it was blocked repeatedly by both district and appeals courts.
Without congressional authorization, the Biden Administration misled millions of borrowers into the illegal SAVE Plan with false promises of artificially low monthly payments – oftentimes as low as $0 – and a short timeline to student loan “forgiveness.” The SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years.
As part of the proposed joint settlement agreement, the Department will not enroll any new borrowers in the illegal SAVE Plan, deny any pending applications, and move all SAVE borrowers into legal repayment plans. If the agreement is approved by the court, it will mark the definitive end of the Biden Administration’s illegal student loan bailout agenda, putting it to rest once and for all, and end the limbo that more than 7 million borrowers currently face when it comes to not being able to make payments on their federal loans.
“For four years, the Biden Administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing Administration,” said Under Secretary of Education Nicholas Kent. “The Trump Administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back. Thanks to the State of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.”
“Our Office fought for hardworking Americans who were being preyed upon by Biden Administration bureaucrats, and we won in court every time,” said Missouri Attorney General Catherine Hanaway. “Unilaterally saddling taxpayers with someone else’s Ivy League debt ignored Congressional authority and was clearly unlawful. We appreciate President Trump’s real, long-term solutions instead of illegal student loan schemes.”
The Department, through its Office of Federal Student Aid (FSA), will provide support to borrowers currently enrolled in the illegal SAVE Plan in selecting a new, legal repayment plan that helps put them on the path to a sustainable financial future while safeguarding the interests of American taxpayers. The Department will begin direct outreach to impacted borrowers to provide guidance about how to repay their student loans in the coming weeks.
Next Steps
If the parties’ joint proposal is approved by the court, borrowers currently enrolled in the illegal SAVE Plan will have a limited time to select a new, legal repayment plan and begin repaying their student loans. Borrowers are encouraged to use FSA’s Loan Simulator tool to estimate monthly payments, determine their repayment eligibility, and select a legal repayment plan that best fits their needs and goals.
Up-to-date information about how the settlement agreement will affect SAVE borrowers is available on StudentAid.gov/courtactions.
SAVE Background
In July 2023, the Biden Administration published the final regulations that established the illegal SAVE Plan, with an effective date of July 1, 2024.
In February 2024, the Biden Administration early-implemented a provision of the SAVE Plan regulations that provided loan forgiveness for borrowers who had been in repayment after as little as 10 years and took out $12,000 or less in student loans, announcing $1.2 billion in forgiveness for almost 153,000 borrowers.
In April 2024, Missouri’s then-Attorney General Andrew Bailey filed a lawsuit along with the Attorneys General from Arkansas, Florida, Georgia, North Dakota, Ohio, and Oklahoma that challenged the illegal SAVE regulations.
In July 2024, the U.S. District Court for the Eastern District of Missouri enjoined parts of the illegal SAVE Plan. As a result, the Biden Administration placed the loans of borrowers enrolled in the illegal SAVE Plan in an administrative forbearance with a 0% interest rate.
In February 2025, the U.S. Court of Appeals for the Eight Circuit enjoined implementation of the entire SAVE Plan, which required the agency to end the 0% interest rate. The Eighth Circuit remanded the case back to the district court for further action.
In July 2025, FSA emailed more than 7.6 million borrowers to inform them that their loans in the SAVE forbearance would begin accruing interest on August 1, 2025. The email also encouraged borrowers to transition to a legally compliant repayment plan.
On December 9, 2025, the Trump Administration and the State of Missouri reached a settlement agreement that will dismiss the litigation in exchange for the Department agreeing not to enroll any new borrowers in the illegal SAVE Plan, to deny any pending applications, and to move all SAVE borrowers into legal repayment plans. The Department has also agreed to hold a negotiated rulemaking session to remove the SAVE Plan from federal regulations, with the exception of the forbearance and deferment provisions that were included in the final SAVE Plan rule that will continue to count for Income-Driven Repayment (IDR) forgiveness purposes.
The parties’ proposed resolution of the lawsuit requires court approval.
IDR Background:
There are currently more than 7 million borrowers enrolled in the illegal SAVE Plan and 450,000 borrowers who have expressed interest in enrolling in the plan who will be impacted by the settlement agreement. All of these borrowers will need to apply for a legal repayment plan. Applying for a legal IDR Plan is quick and easy if borrowers provide consent for the Department to obtain their federal tax information directly from the Internal Revenue Service. This allows the Department to process borrowers’ IDR applications faster and eliminates the need for borrowers to manually upload their income information. When borrowers allow the Department to access their federal tax information, annual recertification of borrowers’ IDR plans is automatic. Borrowers switching from the illegal SAVE Plan to another IDR plan can expect quick and timely processing.
In addition, the Department is working diligently on the loan repayment provisions of the One Big Beautiful Bill Act. This once-in-a-generation law created a new IDR plan, the Repayment Assistance Plan (RAP), that will be available to borrowers by July 1, 2026.
The most up-to-date information about RAP and other federal student aid provisions is available on StudentAid.gov/bigupdates.
Sharing a link to the press release, Education Secretary Linda McMahon declared, “The Biden Administration’s illegal SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years. We won’t tolerate it.”
— Secretary Linda McMahon (@EDSecMcMahon) December 9, 2025
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