WASHINGTON – Student loan borrowers enrolled in the popular Saving on a Valuable Education (SAVE) plan were dealt a serious blow yesterday, as a federal appeals court paved the way for the Department of Education’s plan to end SAVE. Litigation challenging the SAVE plan has been ongoing since 2024, but the Trump Administration stopped defending the plan. In December, the Trump Administration agreed to settle the case and asked a district court to enter judgment vacating the plan and related rules.
Last month, a district court refused to enter the requested judgment, but yesterday an appeals court reversed that decision, allowing the Department to end the SAVE program that provided a ray of hope to student loan borrowers during the national affordability crisis.
“It’s shocking that even as borrowers struggle with an affordability crisis, the Department of Education agreed to scrap the most affordable option for repaying federal student loans, and will soon start raising monthly loan bills for millions of people,” said Abby Shafroth, managing director of advocacy at the National Consumer Law Center. “Families relied on the SAVE plan to afford student loan payments while managing the rising costs of rent, groceries, childcare, and healthcare. By eliminating SAVE, the Department is pulling the rug out from under these families and raising their bills while people struggle to afford the basics.“
Millions of borrowers will see their monthly payments spike once the Department begins to require that borrowers leave the SAVE plan. Monthly bills could quadruple or more for many of the over 7 million people enrolled in SAVE and throw them abruptly back into repayment after a year-and-a-half long pause. In addition to the immediate financial impact, borrowers will be forced to pay more in the long-term – the Department of Education previously estimated that the SAVE plan would save people who borrow for school 40%, on average, in lifetime payments compared to other income-driven repayment (IDR) plans.
This decision will also impact borrowers who are not enrolled in SAVE: In addition to ending the SAVE plan, the Department’s settlement also eliminates nearly everything else included in the 2023 rules that created SAVE, including critical repayment improvement and protections that apply to all borrowers. Under the settlement, those rules will be vacated and the Department will undertake a new rulemaking to revise the repayment plan regulations once more. The Department has said it will consider whether to retain the portions of the regulations that applied to all repayment plans, creating more uncertainty and disruption for all borrowers.
Provisions intended to divert borrowers from default – like automatically enrolling borrowers who fall behind on standard payments into more affordable IDR plans, and allowing borrowers to remain in IDR without having to reapply every year – are on the chopping block. So too are provisions that protect borrowers from losing credit toward having their loans cancelled in IDR because of administrative complexity. For example, as a result of the settlement, people who consolidate their loans to simplify repayment or get out of default are now likely to lose all of the progress they’ve made toward qualifying for IDR loan cancellation.
“The Department of Education should preserve these long-overdue fixes to problems that harmed and confused many borrowers regardless of their payment plan,” said Kyra Taylor, staff attorney at the National Consumer Law Center. “The new rulemaking should be used to build a sensible pathway to retiring student debt, not doubling the monthly payments or the repayment timeframe of borrowers who have done everything the government has asked them to do.”
Since 1969, the nonprofit National Consumer Law Center® (NCLC®) has worked for consumer justice and economic security for low-income and other disadvantaged people in the U.S. through its expertise in policy analysis and advocacy, publications, litigation, expert witness services, and training.