The program lowered monthly payments significantly, in some cases to zero, and fast-tracked loan forgiveness for low-income borrowers.
DENVER — The U.S. Department of Education is moving to shut down the SAVE plan, a student loan repayment program used by more than 7 million borrowers, following a legal settlement with several states. The change could lead to higher monthly payments for many, and leaves borrowers uncertain about their next steps.
The repayment plan, created under President Joe Biden, had been in legal limbo for months after multiple red states challenged it, arguing that it served as a workaround for mass student loan forgiveness. To resolve those legal challenges, the Department of Education has agreed to end the program entirely.
Lexie Allen, a 2023 graduate of MSU Denver, is among the millions of borrowers that once utilized the plan. The program lowered monthly payments significantly, in some cases to zero, and fast-tracked loan forgiveness for low-income borrowers.
“So it’s definitely been confusing, a bit frustrating too,” Allen said. “You know there’s people out here that do want to get rid of this debt, however the circumstances just make it difficult.”
Allen, who plans to return to MSU Denver in the fall to pursue a master’s in social work, said she recently started making payments after two years in forbearance.
“I want the administration to know that I’m not trying to avoid paying my debt. I want to pay my debt. However, with the cost of living and the type of work I do, it’s not as easy compared to someone in a more stable job,” she said.
Karen Cody-Hopkins, a Colorado student loan lawyer, advised borrowers to review their current plans and use federal tools, such as the repayment calculator, to determine the best alternatives.
“All SAVE borrowers will need to be moved into other repayment plans,” Cody-Hopkins said. “It’s going to take a while to process 7 million applications, so there may be other holds that show up as we go along.”
The Department of Education plans to begin notifying impacted borrowers in the coming weeks. Those currently on the SAVE plan will have a limited time to switch to a new repayment program and resume payments. The court still needs to approve the settlement, which Cody-Hopkins said will likely happen early next year.
Allen said she hopes her next degree will come with fewer financial headaches.
“Education to me is access. It’s power,” she said. “Knowledge is the one thing that people can’t take away from you. Having the opportunity to pursue my master’s is a huge goal because it will help me advance.”
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