Student loan borrowers in SAVE plan directed to prepare for repayment

WASHINGTON (AP) — More than 7 million student loan borrowers who have been enrolled in a Biden-era repayment plan will receive notices beginning Friday with instructions to seek a new plan to repay their debt, the Education Department said.

Borrowers enrolled in the SAVE plan, which was struck down by a federal court earlier this month, have been in forbearance since July 2024 as a legal battle played out in courts.

Starting on July 1, loan servicers will begin issuing notices giving borrowers 90 days to select a new repayment plan, department officials said.

Under President Donald Trump, a Republican, “The days of unlawful loan forgiveness are behind us,” Under Secretary of Education Nicholas Kent said.

“Let me be clear, the Trump administration’s perspective is that when a student takes out a loan, they are responsible for repaying it,” Kent told The Associated Press.

The SAVE plan was among several initiatives launched by President Joe Biden, a Democrat, to reduce Americans’ student debt burden. It provided more lenient terms than other repayment plans, reducing loan payments to as little as 5% of a borrower’s discretionary income and offering forgiveness for borrowers who made payments for at least 10 years and originally borrowed $12,000 or less.

While the court challenges played out, borrowers enrolled in the plan have not been required to make payments. But debt balances began accruing interest following a court ruling last summer that blocked implementation of the SAVE plan, meaning some students will see increases in the amount they owe.

Earlier this month, the U.S. Court of Appeals for the 8th Circuit struck down the SAVE plan. The Education Department’s notices to borrowers beginning Friday will direct them to enroll in a plan and resume making payments as soon as this summer.

Borrowers will be contacted by their loan servicers in stages, with a new group receiving word every two weeks. Those who had been enrolled in the SAVE plan the longest will be the first to receive notices.

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