The Department of Education said the ‘SAVE Plan’ would have added more than $342 billion to federal costs over a decade.

  • The Department of Education said the Biden Administration “misled” millions of borrowers into the “illegal” repayment structure.
  • The court must approve the proposal before the transition period begins.
  • It said that borrowers in the program will receive direct guidance to select a new, legally compliant repayment plan once the proposal is approved.

The Trump administration on Tuesday announced a proposed joint settlement agreement with Missouri that would end the Biden Administration’s ‘SAVE Plan,’ a student-loan repayment program the department now argues was unlawful.

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In its statement, the Department of Education said the program would have cost taxpayers more than $342 billion over ten years, including “many Americans who did not attend college or already repaid their student loans.” It said the Biden Administration “misled” millions of borrowers into the “illegal” repayment structure with false promises about eligibility and benefits.

New Repayment Options

Under the proposal, the Office of Federal Student Aid will support borrowers currently enrolled in the ‘SAVE Plan’ by helping them shift into new, legal repayment options. Officials said the guidance process will begin in the coming weeks, with direct outreach outlining alternative plans and steps to resume repayment.

If the court approves the settlement, borrowers will receive a limited window to select a new repayment plan and restart payments. The department said its goal is to ensure that borrowers can maintain a “sustainable financial future” while also safeguarding federal costs.

U.S. equities gained in morning trade on Tuesday. The SPDR S&P 500 ETF (SPY) was up 0.24%, the SPDR Dow Jones Industrial Average ETF (DIA) was up 0.39%, and the Nasdaq-100 tracking Invesco QQQ Trust (QQQ) rose 0.11%. Retail sentiment around QQQ on Stocktwits remained in ‘bearish’ territory over the past day.

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