Over 7 million student loan borrowers enrolled in a Biden-era repayment scheme have been ordered to pick a new plan or risk being automatically placed on one vastly more expensive.
Borrowers enrolled in the Saving on a Valuable Education plan, known as SAVE, will begin receiving notices about switching to other ways to repay starting Friday, according to the Department of Education.
The Trump administration has long targeted SAVE, which was struck down by a federal court last week.
Loan servicers will now begin issuing notices giving borrowers 90 days to select a new repayment plan, department officials said. They will then resume making payments as soon as this summer.
Around half of those on the SAVE plan have incomes low enough to qualify for its zero-dollar monthly payment. A standard plan would see them ordered to pay fixed payments over 10 years, leading to huge increases.
The Independent has contacted the Department of Education for comment.
“The days of unlawful loan forgiveness are behind us,” Under Secretary of Education Nicholas Kent told The Associated Press. “Let me be clear, the Trump administration’s perspective is that when a student takes out a loan, they are responsible for repaying it.”
SAVE was among several initiatives launched by Joe Biden to reduce Americans' student debt burden.
It provided more lenient terms than other repayment plans, reducing loan payments to as little as 5 percent of a borrower's discretionary income and offering forgiveness for borrowers who made payments for at least 10 years and originally borrowed $12,000 or less.
When it was first introduced in 2023, it was met with immediate opposition from Republicans, who sued the government over the program’s legality.
While the court challenges played out, borrowers enrolled in the plan have not been required to make payments.
But debt balances began accruing interest following a court ruling last summer that blocked implementation of the Save plan, meaning some students will also see increases in the amount they owe.
Though notices will begin being sent out from Friday, borrowers will be contacted by their loan servicers in stages, with a new group receiving word every two weeks. Those who had been enrolled in the SAVE plan the longest will be the first to receive notices.
Education Department directs student loan borrowers in SAVE plan to prepare for repayment
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