Student Loan Repayment Plan SAVE Faces the Ax

The Education Department has struck a deal to scrap the SAVE student loan repayment plan. This plan, known for its flexibility and low monthly payments, is now on its way out. The decision comes after a legal battle with Republican state attorneys general, who argued that SAVE was too lenient. The SAVE plan allowed low-income borrowers to pay as little as $0 per month and offered faster loan forgiveness. But now, the Education Department has agreed to stop enrolling new borrowers and move existing ones to other plans. This transition is expected to be challenging, as millions of borrowers have not made payments in years. The settlement means borrowers will have to choose between fixed payment plans or income-based plans. New plans, set to launch in July 2026, will replace SAVE. The deadline for switching plans has been moved up, though the exact timeline is unclear. Loan servicing companies face a daunting task in transitioning millions of borrowers. The head of the Student Loan Servicing Alliance warns of a bumpy road ahead. Meanwhile, advocates like Persis Yu of Protect Borrowers express concern about the financial burden this will place on borrowers. The settlement comes as many borrowers struggle to keep up with payments. Critics argue that ending SAVE will make life more expensive for these borrowers. The Education Department's decision to capitulate to the attorneys general has sparked debate about the future of student loan repayment.