12/16/2025

Student Loan Update: US Department of Education to End SAVE Plan

SAVE Borrowers Must Act Soon - Use FSA's Loan Simulator Tool

The U.S. Department of Education (DOE) announced a proposed joint settlement agreement with the State of Missouri that would end the ‘Saving on a Valuable Education’ (SAVE) Plan, a Biden Administration income-driven repayment plan first introduced in 2023. The move, if approved by the court, means that borrowers currently enrolled in the SAVE Plan will have a limited time to select a new repayment plan and begin repaying their student loans.

DOE, through its Office of Federal Student Aid (FSA), will provide support to borrowers currently enrolled in the SAVE Plan in selecting a new repayment plan and will begin direct outreach to impacted borrowers to provide guidance about how to repay their student loans in the coming weeks. 

The settlement will impact between 7-8 million current SAVE plan borrowers, as well as approximately 450,000 borrowers who have expressed interest in enrolling in the plan. These borrowers will all need to apply for a new repayment plan. Information on applying for a new plan can be found here.

As part of the proposed joint settlement, the U.S. Department of Education will:

• Not enroll any new borrowers in the SAVE Plan
• Deny any pending applications, and,
• Move all SAVE borrowers into other repayment plans

Next Steps 

DOE encourages borrowers currently enrolled in SAVE to use FSA’s Loan Simulator tool to estimate monthly payments, determine their repayment eligibility, and select a new repayment plan that best fits their needs and goals. 

Up-to-date information about how the settlement agreement will affect SAVE borrowers is available on StudentAid.gov/courtactions.

New Repayment Plan Coming Soon – RAP

DOE continues work on the loan repayment provisions of the One Big Beautiful Bill Act, which created a new Income-Driven Repayment plan, the Repayment Assistance Plan (RAP). RAP is scheduled to be available to borrowers by July 1, 2026.

RAP requires borrowers to pay a percentage of their adjusted gross income (AGI):

• $10,000 or Less: Flat $10/month
• $10,001-$20,000: 1% of AGI
• $20,001-$30,000: 2% of AGI
• $30,001-$40,000: 3% of AGI
• $40,001-$50,000: 4% of AGI
• $50,001-$60,000: 5% of AGI
• $60,001-$70,000: 6% of AGI
• $70,001-$80,000: 7% of AGI
• $80,001-$90,000: 8% of AGI
• $90,001 - $100,000: 9% of AGI
• More than $100,001: 10% of AGI

Monthly payments are reduced by $50 for each dependent child claimed on the borrower’s tax return. Under the plan, borrowers are required to make 30 years of payments (360) before relief is allowed.

Like the SAVE Plan, RAP cancels any unpaid interest each month, so balances do not grow if the borrower’s required payment is made. 

The most up-to-date information about RAP and other federal student aid provisions is available on StudentAid.gov/bigupdates. 

Source:

U.S. Department of Education Press Release, “U.S. Department of Education Announces Agreement with Missouri to End Biden Administration’s Illegal SAVE Plan,” December 9, 2025