Federal education officials announced they will begin contacting over 7 million student loan borrowers on Friday, instructing them to choose alternative repayment options after the SAVE program was eliminated by federal courts earlier this month.
These borrowers, who had been participating in the Biden administration’s SAVE repayment program, have not been required to make loan payments since July 2024 while court proceedings unfolded.
Beginning July 1st, loan servicing companies will start sending notifications that give borrowers a 90-day window to pick a different repayment option, according to department representatives.
Under the Trump administration’s leadership, “The days of unlawful loan forgiveness are behind us,” stated Under Secretary of Education Nicholas Kent.
“Let me be clear, the Trump administration’s perspective is that when a student takes out a loan, they are responsible for repaying it,” Kent explained to The Associated Press.
The eliminated SAVE program was part of former President Biden’s efforts to ease student debt burdens for Americans. The plan offered favorable conditions compared to other options, limiting monthly payments to just 5% of a borrower’s discretionary income and providing debt cancellation for those who made payments for a minimum of 10 years while originally borrowing $12,000 or less.
During the legal proceedings, participants in the program were exempt from making payments. However, loan balances started accumulating interest after a court decision last summer halted the SAVE program’s implementation, resulting in higher debt amounts for some borrowers.
The U.S. Court of Appeals for the 8th Circuit officially eliminated the SAVE program earlier this month. The Education Department’s upcoming notifications will instruct borrowers to select a payment plan and begin making payments potentially as early as this summer.
Loan servicers will reach out to borrowers in phases, contacting a new group every two weeks. Those who participated in the SAVE program for the longest period will receive the first notifications.
