The U.S. Department of Education has announced a proposed settlement with the State of Missouri that would bring an end to the Biden Administration’s ‘Saving on a Valuable Education’ (SAVE) Plan. The SAVE Plan, which aimed to provide mass federal student loan forgiveness, faced multiple legal challenges and was blocked by both district and appeals courts.
According to the Department, the SAVE Plan was implemented without congressional approval and promised borrowers lower monthly payments and faster loan forgiveness. Officials estimate that the plan would have cost taxpayers over $342 billion during a ten-year period.
As part of the proposed agreement, the Department will stop enrolling new borrowers in the SAVE Plan, deny pending applications, and transition current participants into repayment plans that comply with existing laws. The agreement still requires court approval before it takes effect.
“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.”
Missouri Attorney General Catherine Hanaway commented on her state’s role in challenging the policy: “Our Office fought for hardworking Americans who were being preyed upon by Biden Administration bureaucrats, and we won in court every time. 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’s Office of Federal Student Aid (FSA) will assist those currently enrolled in the SAVE Plan as they move into legal repayment options. Direct outreach is planned in order to guide affected borrowers through this transition.
If approved by the court, those impacted will have limited time to select a new repayment plan and begin making payments again. Borrowers are encouraged to use FSA’s Loan Simulator tool on StudentAid.gov/courtactions for information about their options.
The SAVE Plan regulations were finalized in July 2023 but soon became subject to litigation from several states led by Missouri’s then-Attorney General Andrew Bailey. In February 2024, an early-implemented provision granted $1.2 billion in forgiveness for nearly 153,000 borrowers who had repaid loans for at least ten years and borrowed $12,000 or less.
Court rulings throughout 2024 and 2025 halted portions—and eventually all—of the SAVE Plan's implementation. In July 2025, FSA notified more than 7 million borrowers that interest would resume accruing on their loans beginning August 1 after administrative forbearance ended.
Under terms of the settlement reached December 9 between federal officials and Missouri representatives—including holding a negotiated rulemaking session—the Department will remove SAVE from federal regulations except certain provisions related to deferment that count toward Income-Driven Repayment (IDR) forgiveness.
Currently more than 7 million borrowers are enrolled in SAVE with another 450,000 expressing interest; all must now apply for legal repayment plans. The application process is streamlined when borrowers allow access to their tax information from the IRS.
Additionally, work continues on implementing provisions from recent legislation known as the One Big Beautiful Bill Act—which created a new IDR option called Repayment Assistance Plan (RAP), expected by July 1, 2026—with updates available at StudentAid.gov/bigupdates.
