The Department of Education has moved to terminate one of former President Joe Biden’s most popular student loan forgiveness plans — impacting millions of Americans — through a proposed joint settlement with the state of Missouri on Tuesday.

The pending agreement ends the Saving on a Valuable Education or “SAVE” plan, which is home to over 7 million student loan borrowers. It marks a major victory for the Trump administration’s efforts to claw back Biden-era policies, including Biden’s numerous efforts to implement student loan debt cancellation.

Officials in the Trump administration’s Education Department, who’ve decried those policies for months, suggested that the administration is righting a wrong by ending the “deceptive scheme” of student loan forgiveness.

​The Biden administration touted the plan for including $0 payments for anyone making $16 an hour or less, lowering monthly payments for millions of borrowers, and protecting borrowers from runaway interest if they are making their monthly payments.

“The law is clear: if you take out a loan, you must pay it back,” Under Secretary of Education Nicholas Kent said in a release from Secretary of Education Linda McMahon’s department on Tuesday. “Thanks to the State of Missouri and other states fighting against this egregious federal overreach, American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies.” 

The Biden administration launched the SAVE Plan, which it dubbed the most affordable payment plan ever, after the Supreme Court struck down Biden’s previous signature debt relief program in 2023. 

SAVE was one of several income driven repayment (IDR) plans, which calculate payment size based on income and family size, aimed at easing the repayment process as a pandemic-era pause ended.  

Several Republican-led states, including Missouri, sued the Biden administration over the plan, and a federal appeals court blocked the program in 2024. 

The announcement on Tuesday would mark an end to those lawsuits.

McMahon, a vocal critic of student loan forgiveness, has said the administration will no longer allow American taxpayers to take on debts that are not their own.

“The Biden Administration’s illegal SAVE Plan would have cost taxpayers, many of whom did not attend college or already repaid their student loans, more than $342 billion over ten years,” McMahon wrote in a post on X. “We will not tolerate it.”.

Her agency’s already saddled Federal Student Aid (FSA) Office will provide support to borrowers currently enrolled in selecting a new, “legal repayment plan,” the department said. 

The department said borrowers will have a limited time to find a new payment plan. However, FSA’s Loan Simulator tool will estimate monthly payments, determine repayment eligibility and select a new plan that best fits those borrowers’ needs and goals, the department said.

Some student loan advocates worry the proposed agreement unleashes chaos on borrowers.

“The 7+ million borrowers enrolled in SAVE will face higher monthly loan payments — and may lose out on months of progress toward loan forgiveness,” Michele Zampini, associate vice president of federal policy & advocacy at The Institute for College Access & Success (TICAS) wrote in a statement.

Protect Borrowers Deputy Executive Director and Managing Counsel Persis Yu said the move strips borrowers of the most affordable repayment plan that would help millions to stay on track with their loans while keeping a roof over their head. 

“This settlement is pure capitulation–it goes much further than the suit or the 8th Circuit order requires,” Yu wrote in a statement to ABC News. “The real story here is the unrelenting, right-wing push to jack up costs on working people with student debt.”

The news of the settlement comes as Trump’s signature domestic policy agenda, the One Big Beautiful Bill Act, included a provision to terminate all current student loan repayment plans — such as SAVE and other income-driven repayment plans — for loans disbursed on or after July 1, 2026. 

Under that bill, the plans will be replaced with two separate repayment plans: a standard repayment plan and the Repayment Assistance Plan (RAP), a new income-based repayment plan coming July 1, 2026.