Dept. of Ed Announces End of SAVE Plan, Offers Little Clarity for Borrowers
This was originally posted on December 9, 2025, and was last updated on March 11, 2026.
In December 2025, the U.S. Department of Education (ED) announced a proposed settlement that would end the Saving on a Valuable Education (SAVE) repayment plan for federal student loans.
On February 27, 2026, rather than approving the proposed settlement, the court instead dismissed the lawsuit that had challenged SAVE. Then, on March 10, 2026, the Eighth Circuit Court of Appeals directed the lower court to reverse the dismissal and enter the final judgment requested in December (see below for details).
ED has not commented on this development beyond the following statement from Undersecretary of Education Nicholas Kent published by CNBC: “In the coming weeks, the Department will issue clear guidance on next steps for borrowers enrolled in the illegal SAVE Plan, including details regarding how borrowers can move into a legal repayment plan.”
The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, legally terminated the SAVE Plan as of July 1, 2028. It is not yet clear what will happen between now and that date.
We will provide additional updates as we know more.
On December 9, 2025, the U.S. Department of Education (ED) announced a proposed settlement that would end the Saving on a Valuable Education (SAVE) repayment plan for federal student loans. As part of the proposed settlement agreement, ED said it will “not enroll any new borrowers in the SAVE plan, deny any pending SAVE applications, and move all SAVE borrowers into available repayment plans.”
This settlement would force the 7+ million borrowers enrolled in the SAVE plan to switch into a different repayment plan far sooner than many expected; SAVE was terminated via statute in the One Big Beautiful Bill Act (OBBBA), but the statutory termination is not effective until July 2028.
ED also says it is rescinding almost all other parts of the regulation that created the SAVE plan—even provisions unrelated to the plan itself—including provisions to enable borrowers in default to access income-based plans and provisions to streamline the application process for all income-based plans.
ED plans to conduct a negotiated rulemaking to effectuate the settlement, but has not given a timeline for this rulemaking. As part of the rulemaking, they also plan to implement the termination of the two other repayment plans that were eliminated in OBBBA: the Income-Contingent Repayment (ICR) and Paye As You Earn (PAYE) plans.
This move, which will increase monthly payments for the 7+ million borrowers currently enrolled in SAVE, comes as 45% of borrowers say they have had to make tradeoffs between covering their basic needs and staying current on their monthly loan payments. Borrowers may also lose out on months of progress toward loan forgiveness.
According to ED, in addition to the 7+ million SAVE enrollees, another 450,000 borrowers who have “expressed interest in enrolling in the plan … will be impacted by the settlement agreement.”
Little Clarity Given to Borrowers
In its announcement, ED gave little concrete, actionable information to borrowers about deadlines for switching plans. This is one more chaotic move by the administration that is sure to confuse and alarm borrowers.
All ED has said so far regarding timing is that the Department, “along with the federal student loan servicers,” will “reach out to SAVE borrowers in the coming months with more information.” ED also notes that it will “begin direct outreach to impacted borrowers to provide guidance about how to repay their student loans in the coming weeks.”
ED is not well prepared to smoothly transition borrowers into other plans. While OBBBA opened Income-Based Repayment (IBR) plans to all borrowers (borrowers previously had to demonstrate a “partial financial hardship” to enroll), ED said that it has not yet updated its systems to enable previously ineligible borrowers to enroll, saying the changes should be complete “later in December 2025.”
ED has also not completed the process of implementing the new income-based plan created in OBBBA, the Repayment Assistance Plan (RAP). They have not yet completed the final rulemaking process nor built out their systems to enable borrowers to apply for enrollment. RAP is set to go into effect in July 2026.
Meanwhile, nearly half (48%) of borrowers have said they are facing long wait times to speak to or receive a response from a loan servicer when they reach out for assistance. There continues to be a backlog of repayment plan applications that servicers have not yet processed, with some borrowers waiting more than six months for resolution.
ED has not told borrowers how long they’ll have to switch into a new plan or how long it will take for servicers to process applications. ED has also given no indication of what recourse borrowers would have if they lose out on months of credit toward loan discharge—and face mounting interest charges—due to servicer processing delays.
The settlement also requires ED to “provide written notice to the Office of the Attorney General of Missouri” should it “plan to or have reason to believe that they will cancel or forgive more than $10 billion in federal student loans within a one-month period.” ED must provide such notice “at least 30 days before cancellation or forgiveness, identifying the basis for [ED’s] legal authority and how much they estimate will be forgiven or cancelled.” This provision would expire after 10 years.
We will provide additional updates as we know more.
