Trump-Missouri Settlement Abruptly Ends SAVE Student Loan Plan for 8 Million Borrowers

A major student loan settlement was announced on December 9, 2025. The agreement between the Trump Administration and Missouri officially terminates the SAVE repayment plan. This action immediately impacts approximately 7.6 million federal student loan borrowers. They must now transition to a different income-driven plan.

The Department of Education confirmed the news. Officials stated the SAVE plan was legally blocked by federal courts. This settlement provides a definitive conclusion to the Biden-era program. Borrowers will have a limited window to select a new repayment option.

Key Details of the Student Loan Settlement

The settlement ends all new enrollment into the SAVE plan. Current participants cannot remain in the program. According to the Department of Education, borrowers must proactively choose a new plan. Failing to act could lead to being placed into a standard repayment plan.

That standard plan often has the highest monthly payment. Education experts urge borrowers not to delay. Nancy Nierman of the Education Debt Consumer Assistance Program in New York emphasized the urgency. She noted the timeline for action is now measured in months, not years.

What Are the Alternative Repayment Options Now?

Borrowers have several income-driven repayment (IDR) plans available. The main options are Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Income-Contingent Repayment (ICR). Each plan calculates payments as a percentage of your discretionary income.

The Department of Education recommends using the Loan Simulator on StudentAid.gov. This tool helps compare monthly payments under each plan. It is a critical first step for every affected borrower. Choosing the right plan can save thousands of dollars over the life of the loan.

Another new option, the Repayment Assistance Plan (RAP), launches July 1, 2026. It may offer lower payments for some but comes with a longer 30-year forgiveness term. Borrowers should weigh all options carefully based on their individual financial situation.

Timeline and Critical Next Steps for Borrowers

The exact deadline to switch plans has not been publicly finalized. However, guidance suggests the transition period will be short. Borrowers should expect direct communication from their loan servicer or the Department of Education soon. Do not wait for this letter to begin researching.

Gather your most recent tax information or pay stubs. You will need this data to apply for a new IDR plan. The application process can be completed online at StudentAid.gov. Allowing the Department to access your IRS data can speed up processing significantly.

This settlement marks a significant shift in federal student loan policy. Millions of borrowers must now navigate a changing landscape. Staying informed and taking prompt action is the best path forward.

Borrowers enrolled in the SAVE student loan plan must act quickly to secure affordable payments under a new program. The recent settlement leaves no room for delay, making immediate financial planning essential.

Thought you’d like to know

What does the SAVE plan settlement mean for me?

If you are enrolled in SAVE, you can no longer stay in that plan. You must select and apply for a new income-driven repayment plan. Your loan servicer will contact you, but you should start the process now.

What happens if I don’t choose a new plan in time?

If you take no action, you will likely be placed into a standard 10-year repayment plan. This plan usually has the highest possible monthly payment. It is crucial to avoid this by submitting an application for an IDR plan.

Which new repayment plan is the best alternative to SAVE?

The “best” plan depends on your income, family size, and loan balance. For most borrowers, the Income-Based Repayment (IBR) plan is the recommended starting point. Use the official Loan Simulator tool to compare your specific options.

Will my progress toward loan forgiveness be lost?

Any qualifying payments you made under SAVE should still count toward Income-Driven Repayment (IDR) forgiveness or Public Service Loan Forgiveness (PSLF). You should confirm this with your loan servicer and keep records of your payment history.

How do I apply for a new income-driven plan?

Visit the Federal Student Aid website at StudentAid.gov. Complete the Income-Driven Repayment Plan Request application. You will need financial documents, such as tax returns, to report your income.

Are there any options if I can’t afford any payments?

Yes. If you are facing unemployment or severe economic hardship, you may qualify for a deferment or forbearance. Contact your loan servicer immediately to discuss these temporary postponement options.