The U.S. Department of Education is set to end the Saving on a Valuable Education (SAVE) student loan forgiveness program, affecting millions of Americans. This decision follows a proposed court settlement announced on December 9, which could significantly impact about 7 million borrowers.
Overview of the SAVE Program
Launched by President Joe Biden’s administration, the SAVE program has faced controversy and legal challenges. Republican-led states, including Alabama, filed lawsuits to stop its implementation. According to the Education Department, many borrowers were misled about the program’s benefits.
- Approximately 115,900 individuals in Alabama enrolled in the SAVE program.
- The estimated cost to taxpayers for the SAVE program would have exceeded $342 billion over ten years.
- Nationally, the SAVE program led to $5.5 billion in loans being forgiven for 414,000 borrowers.
Changes Coming for Borrowers
Once the SAVE program ends, current borrowers will transition to legal repayment plans. This follows the resumption of interest rate accrual in August for those in forbearance. The Education Department will initiate direct outreach to affected borrowers in the upcoming weeks.
Future Loan Forgiveness Plans
Those affected by the termination of the SAVE program may wonder about alternatives. The federal government intends to introduce a new Repayment Assistance Plan in 2026, as part of Trump’s One Big Beautiful Bill. However, the details of this new plan have not yet been made public by the Office of Federal Student Aid.
Impact of the SAVE Program’s End
The SAVE program aimed to address issues within federal loan forgiveness schemes. It offered substantial benefits, including allowing some low-income borrowers to contribute as little as $0 toward their loans. For borrowers with student debt of $12,000 or less, there was a path to forgiveness after ten years of payments.
In 2023, the Supreme Court blocked President Biden’s broader plan to forgive up to $20,000 in student loans for approximately 40 million individuals. This ruling left many borrowers seeking clarity on their repayment options.
What’s Next?
As the Education Department makes these significant changes, borrowers are encouraged to explore the Office of Federal Student Aid’s loan simulator for more information about their new repayment options. The halt of the SAVE program marks a pivotal moment in student loan management.
