The U.S. Department of Education on Tuesday announced a proposed agreement with Missouri that would shutter a Biden-era student loan repayment program and require millions of loan holders to immediately begin repaying their student debt.
The proposal would end the Saving on a Valuable Education, or SAVE, plan, which the Biden administration launched in 2023.
The income-driven repayment program allowed some low-income borrowers to qualify for $0 monthly payments on their federal student loans, while others could have their loans forgiven outright.
The current Department of Education calls that program "illegal."
"As part of the proposed joint settlement agreement, the Department will not enroll any new borrowers in the illegal SAVE Plan, deny any pending applications, and move all SAVE borrowers into legal repayment plans," The Education Department announced on Tuesday.
RELATED STORY | Student loans in SAVE Plan to begin accruing interest
Nearly eight million student loan borrowers on SAVE plans began accruing interest on their debt again in August after the Education Department restarted the charges.
The Student Borrower Protection Center said it projects that the typical borrower will be forced to pay more than $3,500 per year or $300 per month in interest charges.
The ultimate fate of the SAVE plan still depends on what the court decides. The Education Department says if the SAVE plan is ended, borrowers will have a short time to select a new repayment plan before payments resume.
