The Education Department announced Tuesday it has reached an agreement to settle a lawsuit that would end the Biden administration’s Saving on Valuable Education (SAVE) income-driven student loan repayment plan.

The SAVE plan, considered one of the most generous student loan repayment plans in history, offered payments as low as $0 a month and loan forgiveness in some cases as soon as 10 years later. The Biden-era plan had been challenged by GOP-led states in court.

The Education Department said a settlement has been reached that would end the SAVE program and move borrowers to other options, although the agreement still needs approval from the court.

“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,” Kent added.

If approved by the court, the 7 million-plus borrowers in the plan will have a limited time to pick a new income-driven repayment plan before the department moves them out of SAVE.

These borrowers have been in forbearance since the lawsuit began more than a year ago.

“Today’s decision from the Department of Education is devastating for the nearly 8 million student loan borrowers who depended on the SAVE plan to keep their payments affordable. Borrowers have endured years of uncertainty, and this only exacerbates the confusion and financial strain they are already facing,” said Natalia Abrams, president and founder of Student Debt Crisis Center, “Borrowers need real relief and stability, not a return to unaffordable, costly student loan payments that push them closer to financial crisis.”

The Trump administration has made multiple reforms to the student loan system after years of relief efforts for borrowers under then-President Biden.

Republicans had already passed legislation that would have ended the SAVE plan by 2028 and dwindles the number of repayment options to two: a standard repayment plan on a loan between 10 and 25 years or the Repayment Assistance Plan, which requires 30 years of repayment before student loan forgiveness is offered.

—Updated at 2 p.m. EST

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