Nearly half a million student loan borrowers just got a harsh reality check as the Biden-era SAVE Plan gets the boot.
Fox Business reported that nearly 460,000 federal student loan borrowers are being denied access to the Saving on a Valuable Education (SAVE) Plan, a once-promising income-based repayment option that’s now been phased out after legal battles and replaced by President Trump’s One Big Beautiful Bill Act as of a July 18, 2025, policy letter.
Let’s rewind to 2023 when former President Biden rolled out the SAVE Plan with much fanfare. It capped payments at a generous 5% of discretionary income for undergrads and 10% for graduate loans, aiming to ease the burden on low- and middle-income borrowers. The idea was noble, but the execution? Well, let’s just say it hit a brick wall.
By 2024, courts had already tangled the SAVE Plan in legal challenges, blocking its implementation and throwing it into limbo. Meanwhile, about 8 million borrowers enrolled in the plan enjoyed a forbearance period—no payments, no interest accrual, just a financial breather. But as the saying goes, all good things must end, especially when the courts intervene.
To make matters worse, a court order will force interest on these loans to start accruing again next month. That change delivers a bitter blow to borrowers who believed they had caught a break.
Now, don’t confuse this with Biden’s broader student loan forgiveness scheme, which aimed to wipe out nearly $500 billion in debt for over 40 million Americans. The Supreme Court struck that plan down as unconstitutional, ruling that it required congressional approval. After that failure, Biden pivoted to the SAVE Plan as a backup, but legal challenges quickly targeted that effort too.
Enter the Trump administration, which hasn’t minced words about the SAVE Plan, calling it overly generous and a fiscal disaster waiting to happen. “Millions of borrowers enrolled in the Biden Administration’s SAVE Plan [are] based on the false promise of loan cancellation and zero monthly payments,” the Department of Education declared to Politico. Sounds like a classic case of promising the moon without a rocket to get there.
Critics in the current administration also aimed at what they call a “zero-percent ‘litigation forbearance,’” accusing the prior leadership of saddling taxpayers with the bill. As the Department of Education put it, this left “borrowers without clear direction on how to legally repay their loans.” That’s a polite way of saying it was a mess—and now, someone’s got to clean it up.
With a policy letter dated July 18, 2025, the Department of Education officially pulled the plug on SAVE, replacing it under the One Big Beautiful Bill Act. “Loan servicers cannot process these applications as SAVE is no longer an option, as it is illegal,” the department stated bluntly. Well, there you have it—law and order trumping wishful thinking.
So, what’s next for borrowers? The Education Department is rolling out two new repayment options under President Trump’s Big Beautiful Bill: a revised 10-year standard repayment plan and a Repayment Assistance Plan (RAP) that links payments to a streamlined income formula. It’s a shift toward simplicity and, importantly, curbing costs to taxpayers.
The Trump administration says these plans are about helping borrowers find a “legal repayment plan that best fits their needs” while “protecting American taxpayers,” as they put it. That’s a refreshing change from policies that seem to treat the federal budget like a bottomless piggy bank. Let’s hope the execution matches the intent.
For the 460,000 borrowers now losing access to SAVE’s lower payments, this transition won’t be easy. Many signed up expecting long-term relief, only to face higher repayments or tougher terms under the new plans. It’s a stark reminder that government promises aren’t always bankable.
While the SAVE Plan was meant to be a lifeline, its demise highlights the pitfalls of overreaching federal programs that don’t stand up to scrutiny. Legal challenges, court rulings, and policy shifts have left borrowers in a lurch, scrambling to figure out their next move. If there’s a lesson here, it’s that sustainable solutions matter more than flashy headlines.
Fox Business has reached out to the White House and the Education Department for further comment, but so far, the lines are quiet. That silence speaks volumes—borrowers deserve clarity, not more bureaucratic dodgeball.
At the end of the day, this saga is a wake-up call for anyone banking on government handouts to solve personal debt woes. The shift to Trump’s new repayment framework might sting for some, but it’s a push toward accountability and fiscal sanity. Actions have consequences, and sometimes, the bill comes due sooner than expected.
