The Trump administration announced a proposed joint settlement with Missouri that could soon force millions of borrowers in a Biden-era payment pause back into repayment.
Student loan borrowers who remain enrolled in the Saving on a Valuable Education plan forbearance will need to select a new repayment plan, the U.S. Department of Education said in a press release on Tuesday.
The entire SAVE plan has been blocked since February, when the 8th U.S. Circuit Court of Appeals sided with Republican-led states that argued former President Joe Biden lacked the authority to establish the student loan relief plan.
The proposed settlement would dismiss the SAVE litigation in exchange for the Education Department agreeing not to enroll any new borrowers in SAVE and to move all borrowers currently in the plan "into legal repayment plans," according to the department.
As of July, the Education Department had identified more than 7.6 million borrowers in the SAVE forbearance.
The GOP states had argued that Biden, with SAVE, was trying to find a roundabout way to forgive student debt after the Supreme Court blocked his sweeping debt cancellation plan in June 2023.
SAVE came with two key provisions that the lawsuits targeted: It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.
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