Trump Administration’s Deal to End SAVE Student Loan Plan: What the December 9 Settlement Means for Millions of Borrowers

Dateline: Washington, D.C. — December 9, 2025

The federal student loan system is facing yet another seismic shift. On December 9, 2025, the U.S. Department of Education and the state of Missouri announced a proposed court settlement that would effectively terminate the Biden‑era Saving on a Valuable Education (SAVE) income‑driven repayment plan, leaving more than 7 million borrowers to navigate a new and still‑uncertain repayment landscape. ^[1]

At the same time, Trump administration officials signaled their intent to end the special payment pause and forbearance protections that had shielded millions of SAVE borrowers from monthly bills for roughly a year, raising urgent questions about what comes next for borrowers already stretched by high living costs. ^[2]

Key Takeaways

SAVE is being dismantled. A proposed settlement between the Education Department and Missouri (joined by six other states) would terminate the SAVE plan, pending approval by a federal judge in the Eastern District of Missouri. ^[3]
No new SAVE enrollments. Under the deal, the department must stop enrolling borrowers into SAVE, deny pending applications, and shift existing enrollees into other repayment plans over time. ^[4]
Payment pause on borrowed time. Millions of SAVE borrowers have had payments paused via interest‑free or low‑interest forbearance during legal battles. The new agreement is designed to end that pause and restart payments under different plans. ^[5]
A broader crackdown on “illegal forgiveness.” Conservative officials and commentators argue the settlement, combined with new laws and regulations, marks the end of what they call “unlawful” student debt cancellation efforts. ^[6]
Borrowers face rising costs. Independent analyses suggest that eliminating SAVE and consolidating income‑driven repayment (IDR) options could raise average monthly payments by nearly $200 for many borrowers. ^[7]

1. What Happened on December 9, 2025?

On December 9, the Education Department and Missouri announced a proposed joint settlement resolving a long‑running lawsuit over the legality of the SAVE plan. The suit, filed by Missouri and six other Republican‑led states — Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma — claimed that SAVE unlawfully rewrote federal student loan law and imposed massive costs on taxpayers and state‑linked loan agencies. ^[8]

According to court filings and public summaries, the settlement would require the Education Department to: ^[9]

Stop enrolling new borrowers in SAVE
Deny all pending SAVE applications
Move existing SAVE enrollees into other “legally authorized” repayment plans
Initiate a full negotiated rulemaking process to formally repeal the SAVE regulation and address related questions about other IDR plans
Notify Missouri’s attorney general before approving large‑scale future loan forgiveness above a set threshold (more than $10 billion over any 10‑year period) for the next decade

Coverage from The Washington Post and financial site The College Investor emphasizes that the settlement still needs a federal judge’s approval, but officials and analysts widely expect it to be finalized. ^[10]

At the same time, reporting linked to CNBC’s coverage describes Trump officials moving to end the Biden‑era payment pause specific to SAVE borrowers, warning that interest accrual has already resumed for many and that full payments could restart “in the coming weeks” once new rules are in place. ^[11]

2. How Many Borrowers Are Affected?

The numbers are staggering:

Roughly 7 million borrowers are currently enrolled in the SAVE plan, according to federal data and court documents cited by The Washington Post and The College Investor. ^[12]
A July 2025 memo from advocacy group Protect Borrowers estimated that SAVE borrowers collectively owe about $440 billion in student debt. ^[13]
Earlier administrative data show that SAVE had already erased balances for more than 400,000 borrowers, many of them low‑balance borrowers who qualified for forgiveness after 10 years of payments under the plan’s more generous rules. ^[14]

In addition, about 8 million borrowers were swept into a special administrative forbearance, with 0% interest for part of 2024–2025, after federal courts issued sweeping injunctions against SAVE and related IDR changes. ^[15]

Those are the borrowers now directly in the crosshairs of the Dec. 9 settlement and the Trump administration’s move to restart payments.

3. From Biden’s SAVE to Trump’s Repeal: A Short Timeline

To understand the stakes, it helps to see how fast the policy pendulum has swung.

2020–2023: Pandemic pause and Supreme Court defeat

In response to COVID‑19, the federal government paused most student loan payments and interest for more than three years. ^[16]
President Joe Biden then tried to cancel up to $20,000 in federal student debt for tens of millions of borrowers using the HEROES Act of 2003, but the Supreme Court struck down that plan in Biden v. Nebraska on June 30, 2023, ruling that the administration overstepped its authority. ^[17]

2023: SAVE plan launches

Ten days after that Supreme Court ruling, the Education Department finalized the SAVE plan by revising the existing REPAYE income‑driven plan. SAVE aimed to: ^[18]

Cut payments on undergraduate loans to as low as 5% of discretionary income
Exclude more of a borrower’s income from the payment calculation
Prevent unpaid interest from piling up as long as borrowers made their calculated monthly payments
Offer 10‑year forgiveness for borrowers who borrowed $12,000 or less

Millions enrolled quickly, especially as regular student loan payments resumed nationwide.

2024–early 2025: Lawsuits and injunctions

Republican‑led states filed multiple lawsuits in Kansas and Missouri, arguing that SAVE violated the “major questions” doctrine by rewriting loan terms and creating large‑scale forgiveness without Congress. Several courts agreed in part: ^[19]

Federal district courts in mid‑2024 blocked key portions of the plan, including lower payment formulas and some forgiveness provisions. ^[20]
The Eighth Circuit Court of Appeals later issued a broad injunction that halted SAVE entirely and disrupted several older IDR plans. ^[21]

In response, the Education Department put SAVE borrowers into 0% interest forbearance, effectively pausing payments yet again — but only for those in the program. ^[22]

By early 2025, the Trump‑led Education Department had: ^[23]

Resumed interest accrual for SAVE borrowers, while still allowing them to postpone payments
Removed online applications for IDR and loan consolidation after the Eighth Circuit ruling, making it harder for borrowers to switch plans or qualify for forgiveness under PSLF and other programs

July 4, 2025: Congress steps in

On July 4, 2025, Congress passed the “One Big Beautiful Bill Act” (OBBBA), a sprawling tax and budget package that also rewrote parts of student loan policy. ^[24]

According to analyses from The College Investor and private lender Earnest: ^[25]

OBBBA locked in the eventual termination of SAVE by 2028, even before today’s court settlement.
It created a new, less generous income‑driven option called the Repayment Assistance Plan (RAP), with payments between 1% and 10% of income depending on earnings, but fewer interest subsidies.
It scheduled the elimination of most other IDR plans for new loans after mid‑2028, leaving just a small menu of options.

The December 9 settlement accelerates that timeline dramatically by ending SAVE now, rather than phasing it out over several years.

4. Ending the SAVE‑Specific Payment Pause

For borrowers, one of the most immediate questions is what happens to the special pause and forbearance protections tied to SAVE.

Over the past year:

SAVE borrowers were placed into a unique administrative forbearance, often at 0% interest, while lawsuits worked their way through the courts. ^[26]
That pause was distinct from the nationwide pandemic‑era payment pause that ended in 2023.
Some regional outlets, including public broadcasters in Oregon and California, documented widespread confusion and anxiety as borrowers received conflicting messages from servicers about whether they owed anything. ^[27]

By August 2025, the Trump administration had already restarted interest on many SAVE loans while allowing borrowers to remain in forbearance — effectively increasing balances in the background while postponing bills. ^[28]

Now, the Dec. 9 settlement is explicitly designed to end that limbo. Reporting anchored in CNBC’s coverage and advocacy memos suggests: ^[29]

Borrowers in SAVE will not be able to stay there indefinitely; instead, they’ll be moved into other plans once the negotiated rulemaking is complete.
The Education Department has pledged direct outreach and says borrowers remain in the same forbearance “for now,” but it has not announced an exact date when payments will resume under new terms. ^[30]

For millions of households, that means a looming jump from $0 monthly payments (or very low payments) to much higher obligations — potentially within months.

5. Competing Narratives: Relief vs. “Illegal Forgiveness”

The Dec. 9 developments are not just technical; they are deeply ideological.

Conservative view: “The era of illegal student loan forgiveness is over”

In a Wall Street Journal op‑ed titled “The Era of Illegal Student Loan Forgiveness Is Over,” Nicholas Kent and Missouri Attorney General Catherine Hanaway praise the settlement as the culmination of years of litigation against what they call unlawful debt‑cancellation schemes. ^[31]

Their argument, echoed in official statements from the Trump Education Department and Republican state attorneys general, is that: ^[32]

Congress never authorized the kind of sweeping forgiveness built into SAVE.
The Supreme Court’s 2023 ruling in Biden v. Nebraska clearly limited executive power to cancel debt without explicit legislative approval.
Generous IDR plans create “moral hazard” by encouraging borrowing that taxpayers will ultimately subsidize.

As one top Trump education official put it, “The law is clear: if you take out a loan, you must pay it back,” a line conservatives have highlighted as the new guiding principle for federal student aid. ^[33]

Borrower advocates: A “back‑room deal” that jacks up costs

Borrower advocates and progressive lawmakers see things very differently. Groups like Protect Borrowers and policy analysts at the Center for American Progress argue that: ^[34]

SAVE was the most affordable repayment plan in history, especially for low‑income borrowers, and had already delivered tens of billions in relief.
Eliminating SAVE, restricting IDR options, and forcing borrowers into less generous plans will raise monthly payments for most SAVE enrollees, often by hundreds of dollars.
The settlement was negotiated with state attorneys general aligned with the administration and locks in a decade of constraints on future large‑scale forgiveness efforts.

Advocates warn that the combination of higher payments, accumulated interest, and administrative confusion could drive more borrowers into delinquency or default just as other household costs — from rent to medical care — are rising. ^[35]

6. What Repayment Options Replace SAVE?

For borrowers currently in SAVE, the most practical question is: Where will I go instead?

Under existing law and the OBBBA framework, and based on current guidance and analysis, several paths are likely:

6.1 Traditional Income‑Driven Repayment (IDR)

Federal law still provides for at least one durable, congressionally authorized IDR plan — Income‑Based Repayment (IBR) — which was not directly affected by the injunctions or the Dec. 9 settlement. ^[36]

Depending on a borrower’s loan type and when they borrowed, IBR typically:

Caps payments at 10–15% of discretionary income
Offers forgiveness after 20 or 25 years of qualifying payments

However, for low‑income borrowers who were paying 5% (or even $0) under SAVE, IBR may feel substantially more expensive.

6.2 Legacy Plans: PAYE and ICR (For Now)

Plans like Pay As You Earn (PAYE) and Income‑Contingent Repayment (ICR) are still technically on the books, but they were heavily impacted by the same Eighth Circuit injunction that froze SAVE, and OBBBA contemplates phasing them out for new borrowers. ^[37]

The Dec. 9 settlement directs the Education Department to use negotiated rulemaking to decide the future of PAYE and ICR, so their long‑term status is uncertain. ^[38]

6.3 The New Repayment Assistance Plan (RAP)

Starting in mid‑2026, OBBBA’s Repayment Assistance Plan (RAP) is expected to become the main replacement for SAVE for most future borrowers. Analyses describe RAP as: ^[39]

An income‑driven plan with payments between 1% and 10% of income depending on earnings
Less generous than SAVE in terms of interest subsidies and income exemptions
Pairing more modest forgiveness timelines with stricter eligibility rules

Advocacy groups note that Project 2025, a conservative policy blueprint, explicitly recommended eliminating SAVE and replacing it with a single, less generous IDR model — a vision now largely reflected in OBBBA and the Dec. 9 settlement. ^[40]

6.4 Forbearance and Deferment: Short‑Term, Risky Tools

Some borrowers may be tempted to rely on continued forbearance or deferment as they wait for clarity. But consumer advocates and federal guidance warn that: ^[41]

Interest usually continues to accrue in most types of forbearance outside the special SAVE pause, causing balances to balloon.
Long stretches in forbearance do not count toward IDR or PSLF forgiveness.

7. Forecast: What Comes Next for Borrowers and the System?

While no one can predict every twist, current laws, court orders and expert analyses point to several likely trends.

7.1 A spike in payment amounts and complexity

Analysts at think tanks and borrower‑advocacy organizations have already modeled what happens if SAVE disappears and IDR options shrink: ^[42]

Many borrowers who were paying 5% of income or less under SAVE could see that share double or triple under IBR or RAP.
Average payments for some groups could rise by around $200 per month, according to an analysis referencing The Hill’s reporting.
Servicers will have to simultaneously transition millions of borrowers into new plans, a process that has already strained call centers and led to errors in past payment restarts.

7.2 A quieter but more permanent shift in legal authority

Legally, the Dec. 9 settlement builds on the Biden v. Nebraska precedent and multiple lower‑court rulings that invoked the major questions doctrine to rein in executive‑driven forgiveness and IDR expansion. ^[43]

The combination of:

A Supreme Court skeptical of broad debt cancellation, and
A settlement that restricts large‑scale forgiveness for at least a decade

means that future presidents will likely find it much harder to attempt mass student loan forgiveness without going through Congress.

7.3 Political pressure heading into 2026

The policy fight is now squarely political:

Progressive lawmakers such as Rep. Ayanna Pressley have already denounced earlier injunctions against SAVE as “GOP sabotage” and are likely to criticize this settlement in similar terms. ^[44]
Conservatives are framing the end of SAVE as a victory for “fairness” to taxpayers and to borrowers who never expected their loans to be forgiven. ^[45]

As millions of borrowers open higher bills in 2026, both parties will face intense pressure to explain how their preferred policies address college costs and existing debt.

8. What Borrowers Should Do Right Now

Even though the settlement is not yet final, experts and official guidance suggest several concrete steps for SAVE borrowers and others affected by these changes: ^[46]

Watch for official communications
- Keep an eye on emails and letters from Federal Student Aid (studentaid.gov) and your servicer; the department has promised direct outreach in the “coming months” as it implements the settlement.
Log in to your studentaid.gov account
- Confirm your contact information, loan servicer and current repayment status.
- Download your loan details so you have a record of balances and interest.
Use the federal loan simulator
- Run scenarios for IBR, PAYE, ICR and the upcoming RAP (once available) to estimate payments under different plans.
Avoid unnecessary forbearance
- Unless it’s part of the official SAVE transition, long‑term forbearance can increase your total cost and delay forgiveness.
Document any servicer errors
- If you receive conflicting information about whether you owe payments, save screenshots and written correspondence; legal advocates have successfully used such documentation in past disputes.
Seek nonprofit or legal counseling if needed
- Regional legal aid groups and nonprofit credit counselors often provide free or low‑cost help decoding federal student loan options.

The Bottom Line

December 9, 2025 marks a turning point in the student loan saga. The SAVE plan — once billed as the most borrower‑friendly repayment option in history — is effectively being dismantled, and with it, a key pillar of Biden‑era student debt relief. ^[47]

For the Trump administration and its allies, the proposed settlement and accompanying reforms represent the long‑awaited end of “illegal student loan forgiveness.” For millions of borrowers who built their budgets around SAVE’s lower payments and forgiveness timeline, it feels more like the end of the road — and the beginning of a far more expensive journey.

How painful that journey becomes will depend on three things that remain uncertain tonight: how quickly payments resume, how generous the replacement plans are in practice, and whether Congress has the appetite to revisit the cost of college and the structure of federal loans at all.