Trump to Undo Biden-Era Student Loan Payment Pause, Forcing Millions of Borrowers Into Repayment

The Trump administration announced on Tuesday that it had proposed a joint settlement with Missouri aimed at officially ending the student loan payment pause that was put in place under former President Joe Biden. This move could have significant implications for millions of borrowers who have been temporarily excused from making payments during the pandemic relief period.

Terminating the 'Saving on a Valuable Education' (SAVE) plan could force approximately 7.6 million enrolled individuals to resume their loan repayments. The US Department of Education stated in a press release that borrowers currently in the SAVE plan forbearance will need to select a new repayment option.

The forbearance, which has been in effect since February, was challenged in court following a ruling by the 8th US Circuit Court of Appeals that sided with Republican-led states opposing Biden's relief measures. These states argued that the President lacked the constitutional authority to establish such a relief programme.

No New Enrolments Into SAVE

The proposed settlement would effectively dismiss ongoing litigation surrounding the SAVE plan. In addition, the Department of Education has agreed not to enrol new borrowers into the scheme, to deny pending applications, and to transition those already enrolled into standard legal repayment plans. However, any final agreement will require approval from a judge.

Early Exit for Borrowers

Alarmingly, according to education expert Mark Kantrowitz, borrowers could be required to exit the SAVE forbearance as early as 2026. This is a timeline significantly sooner than most had anticipated. The Trump administration's legislation, often referred to as the 'big beautiful bill', set the expiration of the SAVE programme for 1 July 2028.

The Department of Education has indicated that it will begin outreach efforts to affected borrowers in the coming weeks, providing guidance on how to manage their loan repayments moving forward.

Political Statements and Reactions

Undersecretary of Education Nicholas Kent criticised the Biden administration's approach, stating: 'For four years, the Biden administration sought to unlawfully shift student loan debt onto American taxpayers, many of whom either never took out a loan to finance their postsecondary education or never even went to college themselves, simply for a political win to prop up a failing administration.' He added, 'The Trump Administration is righting this wrong and bringing an end to this deceptive scheme. The law is clear: if you take out a loan, you must pay it back.'

Kent further expressed appreciation for the US states that challenged the relief measures, emphasising that taxpayers can now be assured they will no longer be compelled to shoulder the burden of what he called irresponsible student loan policies.

Legal Battles and Political Controversy

The GOP-led states had argued in their lawsuits that Biden's use of the SAVE programme was an attempt to find a way to forgive student debt after the Supreme Court blocked his broader debt cancellation plan in 2023.

Controversy Over the Settlement

The SAVE provision included the lowest monthly payments compared with other federal student loan repayment options, which helped borrowers with smaller balances to pay off their debt more quickly. The settlement comes months after the Department of Education began charging interest on the loans of borrowers in SAVE forbearance.

Consumer groups have criticised the development. Persis Yu of Protect Borrowers described the move as stripping 'the most affordable repayment plan' from borrowers.

With over 42 million student loan borrowers holding outstanding debt exceeding $1.6 trillion, according to the Congressional Research Service, the proposed deal, if approved, would primarily impact low earners relying on the lower payments offered by the SAVE plan.