The Trump administration announced a settlement on Tuesday with several Republican-led states to terminate President Joe Biden’s student loan repayment program, which has provided assistance to millions of borrowers. The U.S. Department of Education revealed plans to halt the Save on a Valuable Education (Save) income-driven repayment initiative, which currently benefits over 7 million borrowers, dubbing it “illegal.”
In a press release, the department indicated that it would cease all new enrollments in the Save program, deny any pending applications, and transition existing participants to alternative repayment plans. If the settlement manages to gain approval from the U.S. District Court for the Eastern District of Missouri, borrowers will have a limited window to select a new repayment option before being shifted out of the program automatically.
Nicholas Kent, the education under-secretary, criticized the Biden administration’s approach, claiming it wrongfully aimed to transfer the burden of student loan debt onto American taxpayers. “The Trump administration is righting this wrong and bringing an end to this deceptive scheme,” he stated, emphasizing that borrowers should be responsible for repaying their loans.
Catherine Hanaway, Missouri’s Republican attorney general, who was part of the lawsuit against the Biden administration along with several other states, expressed satisfaction with the court victory. She argued that the previous administration’s actions had unlawfully imposed the repayment responsibilities onto taxpayers and recognized Trump’s efforts to present authentic solutions rather than “illegal student loan schemes.”
Biden’s Save program had become known as one of the most accommodating student loan repayment initiatives, reducing some borrowers’ payments to as low as $0 and cutting the required payments on undergraduate loans significantly. However, critics, particularly from Republican states, contended that the administration overstepped its authority by establishing repayment plans and forgiving loans without congressional consent.
In contrast, advocates for borrowers voiced their concerns regarding the decision to eliminate the Save plan. Persis Yu, deputy executive director of Protect Borrowers, criticized the settlement as a backroom deal that jeopardizes financial stability for millions of borrowers. Natalie Abrams, president of the Student Debt Crisis Center, described the announcement as devastating, highlighting the continued uncertainty and financial strain faced by borrowers.
Currently, over 43 million Americans hold federal student loan debt, totaling more than $1.6 trillion. Recent findings suggest that around 12 million borrowers are behind on their payments, with 5.5 million in default, indicating the depth of the financial challenges many are facing.
As this situation unfolds, the implications for borrowers and the ongoing debate about student debt relief remain significant, with many individuals hoping for a resolution that preserves affordable repayment options.