Democratic senators issued an urgent warning to the Education Department to slow down before enforcing new rules, following the Trump administration’s formal move to terminate the Biden-era Saving on a Valuable Education (SAVE) plan.
Under the current guidance, more than 7 million borrowers enrolled in SAVE will have just 90 days to switch to a new repayment plan, beginning in July. Those who fail to act could automatically be placed into repayment options that carry significantly higher monthly bills, potentially increasing payments by hundreds of dollars for some borrowers.
“These borrowers deserve to have the time, critical information, and support necessary to successfully enroll in another affordable repayment plan and continue to pay down their loans,” the senators wrote in a letter to Education Secretary Linda McMahon.
Why It Matters
The end of SAVE marks one of the most consequential shifts in student loan repayment since payments resumed after the pandemic pause. For millions of households already grappling with rising housing and food costs, even modest increases in monthly student loan bills could have far‑reaching financial effects.
What To Know
The Department of Education has announced that borrowers currently enrolled in SAVE must exit the plan and enroll in a different, legally authorized federal repayment plan within a 90‑day window once they are notified by their loan servicer.
According to the department, this transition period will begin no earlier than July 1.
Borrowers who do not proactively choose a new repayment option during that window will be automatically placed in either the Standard Repayment Plan or a new Tiered Standard Plan, both of which typically result in higher monthly payments than SAVE.
“We are extremely concerned that the Department’s decision to force SAVE borrowers who do not take action in time into the Standard Plan or the new Tiered Standard Plan will result in substantially higher, and consequently unaffordable, payments,” Senators Jeff Merkley of Oregon, Tim Kaine of Virginia, Elizabeth Warren of Massachusetts, and Sheldon Whitehouse of Rhode Island wrote, alongside other Democratic colleagues, in their letter.
The SAVE plan was created by the Biden administration in 2023 as a new income‑driven repayment (IDR) option designed to make student loan payments more affordable. It replaced the earlier REPAYE plan and tied monthly payments more closely to a borrower’s income and family size, while shielding a larger share of income from repayment calculations.
For many borrowers, SAVE significantly lowered monthly bills and shortened the path to loan forgiveness compared with older IDR programs. At its height, more than 7 million borrowers were enrolled, many of whom were in administrative forbearance while the program moved through the courts.
Almost immediately, SAVE faced legal challenges from Republican‑led states, which argued the Education Department lacked the authority to implement such expansive repayment and forgiveness benefits.
“The current administration has pushed so much through the courts that it’s left borrowers in financial purgatory,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek. “If they’re forced into new plans, payments will likely increase and could fluctuate, all through no fault of their own.”
After nearly two years of litigation, a federal appeals court instructed a lower court to vacate the SAVE plan. And earlier this year, the Trump administration finalized a settlement with Missouri that formally ended the program and barred any new enrollments, effectively forcing all current participants out of SAVE.
“Today’s guidance, which every borrower enrolled in the defunct SAVE Plan will receive over the next week, puts the Biden Administration’s illegal student loan bailout agenda to rest once and for all,” Under Secretary of Education Nicholas Kent said in March. “For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration’s policy is simple: if you take out a loan, you must pay it back.”
Many SAVE borrowers have not made payments for months or longer due to court‑ordered forbearances, and now face the prospect of resuming repayment at sharply higher levels with limited time to prepare.
From the senators’ side, the concern is that delinquency and default rates could rise if borrowers are pushed into plans they cannot afford.
The group of lawmakers pressed the Education Department on the lack of transparency regarding how borrowers will be transitioned, what safeguards will be in place for those who cannot afford higher payments, and whether the department can manage the scale of the change without widespread errors.
“Despite the rhetoric, the borrowers are actually doing what they are supposed to do—they pay their loans as their income allows. There are a lot of professions that may not earn a lot of money but still require advanced degrees, Teachers being one example of that list,” Drew Powers, the founder of Illinois-based Powers Financial Group, told Newsweek.
“All of society benefits when our teachers, as well as other professions, are more highly educated and highly trained. Forcing millions off of SAVE was a political move, not a budgetary one, and it hurts a lot of the folks we rely on every day.”
So far, the Education Department has not indicated that the 90‑day deadline will be extended. In a March announcement, the department said the time frame provides borrowers with “ample time” to evaluate repayment options and plan accordingly.
“Ultimately, if you’re a borrower in this situation, now is the time to start planning for this change,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “You don’t want to be surprised with a higher payment, especially if you can transition to one of the new income-driven repayment options.”
What Happens Next
Borrowers exiting SAVE may choose from several remaining federal repayment plans, including existing income‑driven options like Income‑Based Repayment (IBR), Pay As You Earn (PAYE), or Income‑Contingent Repayment (ICR), depending on eligibility.
“That opens the door to higher default rates. And once defaults start, you’re looking at wage garnishments, damaged credit, and limited access to borrowing,” Thompson said. “For many, that’s not a short-term issue; it’s something that can follow them for years.”
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