Panelists Caroline Downey and Cage Sawyers discuss how student loan delinquencies are set to hit record highs while a growing number of current and prospective college students don’t believe the degree is worth the price tag on ‘The Bottom Line.’
Nearly half a million federal student loan borrowers will be denied access to lower repayment options, according to a report.
Per internal Education Department documents reported by Politico, the income-based repayment proposal, known as the “SAVE (Saving on a Valuable Education) Plan, was introduced by former President Biden in 2023 and capped payments at 5% of discretionary income for undergraduates and 10% for graduate loans. The goal was to make student loan repayment more affordable, especially for low- and middle-income borrowers.
The plan was blocked by the courts in 2024, and it’s been in legal limbo since, with interest set to start accruing again under court order from next month.
Nearly half a million federal student loan borrowers will be denied the ability to make lower repayments on their student loads as the Trump administration seeks to overhaul the repayment system. (istock / iStock)
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It is separate from Biden’s student loan forgiveness plan, which sought to erase nearly $500 billion worth of student loans, affecting more than 40 million Americans. The Supreme Court struck down that plan as unconstitutional, ruling that such widespread debt cancellation required congressional approval.
However, that ruling resulted in Biden immediately pivoting to launching the SAVE Plan as a fallback.
The income-based repayment proposal under the SAVE Plan impacts around 460,000 federal student loan borrowers who have signed up for it, according to the Politico report. In total, nearly 8 million borrowers are enrolled in the SAVE Plan and have been in general forbearance, meaning they are not required to make monthly payments and no interest on their loans is accruing.
The Trump administration has repeatedly criticized SAVE as overly generous and fiscally irresponsible.
Former President Joe Biden is joined by former Education Secretary Miguel Cardona announcing the SAVE plan. (Chip Somodevilla/Getty Images / Getty Images)
A July 18 policy letter from the department confirms that the SAVE Plan has been officially phased out and replaced under the One Big Beautiful Bill Act.
“Loan servicers cannot process these applications as SAVE is no longer an option, as it is illegal,” the department said in a statement to the Politico.
Fox Business has reached out to the White House and the Education Department for additional comment.
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In place of SAVE, the Education Department is rolling out two new repayment plans as part of a broader overhaul under President Donald Trump’s Big Beautiful Bill, which aims to simplify the student loan system and curb costs to taxpayers.
The two new plans include a revised 10-year standard repayment plan and a new Repayment Assistance Plan (RAP), which ties payments to a simplified income formula.
The Department of Education last week said “millions of borrowers enrolled in the Biden Administration’s SAVE Plan [are] based on the false promise of loan cancellation and zero monthly payments, despite multiple federal courts striking down such policies.”
Education Secreatry Linda McMahon. (Stefani Reynolds/Bloomberg via Getty Images / Getty Images)
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“The Biden administration also invented a zero-percent ‘litigation forbearance,’ forcing taxpayers to foot the bill and leaving borrowers without clear direction on how to legally repay their loans,” the department said.
The Trump administration, meanwhile, vowed to “support borrowers in selecting a new, legal repayment plan that best fits their needs and helps them get on a sustainable financial path while protecting American taxpayers.”
Fox News’ Danielle Wallace contributed to this report.
