AccessLex
January 07, 2026
By: Monica Konaté, Senior Policy Manager
History of the SAVE Plan
In August 2023, the Biden-Harris Administration unveiled the Saving on a Valuable Education (SAVE) Plan which was touted as being the most affordable student loan repayment program to date. It increased the amount of income protected from the monthly payment calculation from 150% to 225% of the federal poverty line, waived unpaid interest, canceled the debt for those who borrowed $12,000 or less in federal student loans after 10 years, and reduced undergraduate borrowers’ payments to five percent of discretionary income. This meant lower-monthly payments, faster paths to forgiveness, and no accumulating interest – dramatically easing the financial burden of federal student loans.
However, not long after its release, a group of states spearheaded by Missouri sued the Biden-Harris Administration to block the SAVE Plan arguing that it did not have the authority to alter student loan repayment plans. In July 2024, the Eighth Circuit Court of Appeals ruled that the Education Department (ED) had to stop implementing parts of the SAVE Plan while the case was ongoing. As a result, ED placed nearly eight million borrowers enrolled in the SAVE Plan into an interest-free administrative forbearance while the case made its way through the courts.
Under the current Trump Administration, ED restarted the accrual of interest in August 2025 to comply with the federal injunction – though it was never clarified which part of the injunction required ED to resume accruing interest.
A Final Settlement
On December 9, 2025, ED announced that it reached a settlement agreement with Missouri and other states, pending final court approval, which would officially end the SAVE Plan. As part of the agreement, ED promised to:
- Cease enrolling any new borrowers in the SAVE Plan;
- Deny pending SAVE Plan applications; and
- Move all SAVE Plan borrowers into "legal repayment plans."
ED also agreed to hold a negotiated rulemaking session to remove the SAVE Plan from federal regulations, with the exception of the forbearance and deferment provisions that were included in the final SAVE Plan rule that will continue to count for income-driven repayment (IDR) forgiveness purposes.
What Borrowers Can Expect
ED has not provided detailed information about what borrowers can expect, other than encouraging borrowers to switch plans and committing to supporting borrowers in the coming weeks as they make the transition out of the SAVE Plan.
Borrowers who will be impacted by this agreement should consider scheduling a free call with an Accredited Financial Counselor® via AccessConnex by AccessLex℠ coaching to discuss their options and the considerations impacting their repayment decisions.
Update March 2026: A federal judge declined to approve the settlement agreement and instead dismissed the lawsuit finding that ED was no longer actively defending the plan. However, the Eighth Circuit Court of Appeals reversed the lower court’s decision ordering the lower court to accept the settlement between ED and the plaintiff states.