Trump administration strikes deal to end Biden’s student loan repayment plan

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The Trump administration on Tuesday said it has reached an agreement with seven states to resolve a lawsuit challenging the legality of former president Joe Biden’s student loan repayment plan, a deal that could leave millions of borrowers scrambling to find another option to repay their debt.

The 7 million people now enrolled in the Saving on a Valuable Education program, commonly known as Save, will have a limited time to find a new plan if the U.S. District Court for the Eastern District of Missouri approves the proposed settlement, the Education Department said. The proposed deal does not provide an explicit timeline, and the department did not respond to questions about the deadline. Before now, enrollees had three years to switch out of the Save plan because of the tax law that President Donald Trump signed in July, but that exit has been slow-going amid a backlog in processing applications for other income-driven repayment plans.

The settlement stems from a lawsuit brought by Missouri, Arkansas, Florida, Georgia, North Dakota, Ohio and Oklahoma to overturn Save, which offers lower monthly payments and a faster path to loan cancellation.

Under the agreement, the Education Department must cease enrolling anyone in the Save plan, deny any pending applications and move current enrollees out of the program. The department will convene a panel of experts for a negotiated rulemaking to repeal the Save regulation, which was already part of the tax plan. The settlement calls on the department to notify the Missouri Attorney General’s office at least 30 days before canceling more than $10 billion in federal student loans. That provision will expire 10 years after the date of the settlement agreement.

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