The U.S. Department of Education plans to end a student loan debt forgiveness program used by millions of Americans.
The feds said Dec. 9 that they had reached a proposed court settlement to kill the Saving on a Valuable Education (SAVE) debt relief program.
If approved by the court, about 7 million borrowers would need to move to other repayment plans.
SAVE has been controversial since it was first announced by President Joe Biden’s administration. A group of Republican-led states, including Alabama, sued to halt the plan.
“Without congressional authorization, the Biden Administration misled millions of borrowers into the illegal SAVE Plan with false promises of artificially low monthly payments – oftentimes as low as $0 – and a short timeline to student loan ‘forgiveness,’” the Education Department said in a news release. “The SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years.”
About 115,900 Alabamians are enrolled in SAVE, according to a 2024 news release.
What happens to my SAVE plan?
Current borrowers will be moved to “legal repayment plans,” according to the Education Department. For more information, students should go to the Office of Federal Student Aid’s loan simulator site.
Interest rate accrual resumed in August for SAVE borrowers who had forbearance.
“The Department will begin direct outreach to impacted borrowers to provide guidance about how to repay their student loans in the coming weeks,” the Education Department said in the news release.
The SAVE plan will not accept any more new applications.
Will there be a new loan forgiveness program?
In 2026, the federal government plans to roll out the Repayment Assistance Plan. This was created in 2025 through Trump’s One Big Beautiful Bill.
The Office of Federal Student Aid has not yet publicized details about the plan.
Who used SAVE?
SAVE was supposed to clean up lots of problems in federal loan forgiveness programs. It was also really generous (according to people who sued to block it, way too generous). Some low-income borrowers could pay as little as $0 toward federal student loans.
Students who owed $12,000 or less would have their debt forgiven if they made payments for about 10 years.
Nationally, 414,000 people had $5.5 billion in loans forgiven under the program.
Biden also wanted to forgive up to $20,000 in loans for 40 million people, but the Supreme Court blocked that plan in 2023.
What else is changing?
The Education Department made several changes in 2025 to student financial aid, including cancelling the Grad PLUS loan program, reducing graduate student loans and adjusting requirements for public service loan forgiveness.
