Report: 460,000 Student Loan Borrowers Denied SAVE Plan, Face Increased Repayments

 Trump Administration Introduces Streamlined Repayment Options Following Reversal of Biden’s Loan Program

Nearly half a million federal student loan borrowers will be denied the ability to make lower repayments on their student loads as the Trump administration seeks to overhaul the repayment system. (istock / iStock)

‘Everyone Was Told to Get a Degree—Now We’re in a Student Loan Crisis’: Caroline Downey

On The Bottom Line, panelists Caroline Downey and Cage Sawyers explored the growing student loan crisis as delinquencies are expected to hit record levels. They noted a sharp rise in skepticism among students and families over whether a college degree is worth the rising cost.

According to a recent report, nearly 500,000 federal student loan borrowers will be denied access to more affordable repayment options. Internal Education Department documents obtained by Politico reveal that the SAVE (Saving on a Valuable Education) Plan—introduced by former President Biden in 2023—was designed to ease the burden on low- and middle-income borrowers by capping payments at 5% of discretionary income for undergraduate loans and 10% for graduate loans.

However, the plan was blocked by the courts in 2024 and remains in legal limbo. With the court-ordered pause lifted, interest on student loans is set to begin accruing again next month, leaving many borrowers facing higher monthly payments.

Trump’s ‘Big, Beautiful Bill’ Targets Biden’s Student Loan ‘Scheme,’ Top Republican Says

A leading Republican has hailed former President Donald Trump’s newly proposed legislation as a tough response to what they describe as President Biden’s “student loan scheme.” The bill is being positioned as a direct crackdown on Biden’s SAVE Plan and broader student debt relief efforts.

This new proposal is separate from Biden’s original student loan forgiveness plan, which aimed to cancel nearly $500 billion in student debt for over 40 million Americans. That plan was struck down by the Supreme Court as unconstitutional, with the court ruling that such sweeping debt cancellation required congressional approval.

In response to that ruling, Biden quickly pivoted to introduce the SAVE (Saving on a Valuable Education) Plan—a revised income-driven repayment program. According to a report from Politico, the plan affects approximately 460,000 borrowers who enrolled and are now facing denial of access due to legal and administrative complications. In total, nearly 8 million borrowers are enrolled in the SAVE Plan, which has placed them in general forbearance, meaning they’re not required to make payments and interest has not been accruing.

The Trump administration has sharply criticized the SAVE Plan, calling it excessively generous and fiscally irresponsible, arguing it places undue burden on taxpayers.

Former President Joe Biden is joined by former Education Secretary Miguel Cardona announcing the SAVE plan. (Chip Somodevilla/Getty Images / Getty Images)

A policy letter dated July 18 from the Department of Education confirms that the SAVE Plan has been officially discontinued and replaced by provisions 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 in a message to Politico.

Fox Business has contacted the White House and the Education Department for further comment.

Trump Administration Resumes Interest Charges for Nearly 8 Million Student Loan Borrowers After Biden’s Limbo

Replacing the SAVE Plan, the Education Department is introducing two new repayment options as part of a wider overhaul under President Donald Trump’s Big Beautiful Bill, which seeks to simplify the student loan system and reduce costs to taxpayers.

The new plans include a revised 10-year standard repayment plan and a Repayment Assistance Plan (RAP), which bases payments on a streamlined income formula.

Last week, the Department of Education said, “millions of borrowers enrolled in the Biden Administration’s SAVE Plan [were] misled by false promises of loan cancellation and zero monthly payments, despite multiple federal courts striking down such policies.”

Education Secreatry Linda McMahon. (Stefani Reynolds/Bloomberg via Getty Images / Getty Images)

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“The Biden administration also created a zero-percent ‘litigation forbearance,’ which shifted the cost onto taxpayers and left borrowers uncertain about how to legally repay their loans,” the Department of Education stated.

In contrast, the Trump administration pledged to “help borrowers choose a new, legal repayment plan that suits their needs, supports sustainable financial progress, and safeguards American taxpayers.”