Major Update For 8 Million Borrowers: GOP Plan Would Reshape Student Loan Forgiveness And Kill SAVE

Forbes

02-05-2025

The GOP's student loan plan would eliminate the SAVE program and overhaul student loan forgiveness, ... More forcing 8 million borrowers to prepare for major repayment changes.
Student loan borrowers counting on student loan forgiveness via former President Joe Biden's Saving on a Valuable Education plan (more commonly known as the SAVE plan) will likely see it effectively vanish, not by a court order, but by an act of Congress. House Republicans have unveiled a sweeping proposal, the Student Success and Taxpayer Savings Plan, which includes an end to the SAVE plan. The GOP student loan plan proposes shifting all existing income-driven repayment options into a single, new plan via budget reconciliation, a procedural path requiring only a simple majority vote.
Using the savings from overhauling student loan forgiveness and ending the borrower-friendly SAVE plan will help pay for extending President Donald Trump's tax cuts. This shift signals that the SAVE plan's demise is increasingly inevitable and more likely to come from Capitol Hill than the courtroom. "Folding the four current IDR plans into one would effectively end President Joe Biden's Saving on a Valuable Education plan, which has been tied up in court since last year, The Washington Post noted. 'Higher-education experts say congressional Republicans want to end SAVE through reconciliation, rather than the courts, to use the savings to offset Trump's tax cuts. And with the case stalled in the courts, they might get their way,' it added.
In late April 2025, House Republicans introduced proposals to reform student loan repayment dramatically. According to House Education Committee chairman Tim Walberg (R-Michigan), the legislation would save over $330 billion in spending, savings Republicans plan to redirect toward financing an extension of the 2017 Trump tax cuts​. By packaging these student loan changes into a reconciliation bill, the GOP aims to fast-track the rollback of Biden's loan relief policies with only a simple majority.
The House GOP proposal consolidates all existing income-driven repayment plans into one, dubbed the Repayment Assistance Plan. This includes terminating Biden's SAVE plan as well as ICR and PAYE repayment options for loans taken out after July 1, 2026. SAVE proved extremely popular, with over 8 million borrowers enrolling before a federal court paused the program in late 2024 amidst a Republican-led lawsuit​.
That ongoing litigation had left SAVE's fate in limbo, but Republicans aren't waiting for a final verdict. By legislating away the SAVE plan now, they can achieve a political win and simultaneously claim substantial budgetary savings to offset tax cuts. In other words, the GOP is attempting to kill the SAVE plan through Congress rather than rely on the courts to do the job. Oral arguments in the court case challenging the administration's authority to implement SAVE are currently slated for October 24. Meanwhile, Republicans aim to pass a final reconciliation package between May and July; "the reconciliation process sets a deadline of September 30 to pass the bill or lose all of the benefits of the budget process," as NPR notes.
From the Republican perspective, ending SAVE via reconciliation offers two advantages. First, it sidesteps uncertainty given that court cases can drag on or could be overturned on appeal, whereas a new law would definitively terminate SAVE. Second, the budgetary savings from eliminating future loan forgiveness under SAVE can be banked to help pay for other priorities, like Trump's tax cuts.
So, what exactly would replace the SAVE plan? The House GOP bill proposes to shrink today's income-driven repayment options to a single plan, tentatively called the Repayment Assistance Plan. Here's how the new plan compares to SAVE:
While the GOP's Repayment Assistance Plan retains income-based payments and interest relief to avoid debtor distress, it yanks away generous forgiveness terms and other borrower protections that define the SAVE plan. The result could be a much costlier repayment regime for most borrowers than SAVE promised, although some borrowers may find RAP a less expensive option (e.g., borrowers with a high-income growth rate).
According to an analysis by the Student Borrower Protection Center, a typical borrower with a bachelor's degree would pay nearly $3,000 more per year under the Republican repayment framework versus what they would have spent on SAVE or similar plans. That translates to hundreds of dollars extra every month. In a letter, the advocacy group's director, Mike Pierce, warned lawmakers that the GOP student loan plan would make monthly bills "spike by hundreds of dollars" for millions, eroding the affordability gains that SAVE had introduced​.
Once heralded as a game-changer for affordable student loan repayment, the SAVE plan is likely on its last legs. Republicans have set their sights on dismantling it through Congress, and they might succeed even before the courts can opine. It behooves borrowers counting on SAVE's promise of low payments and eventual student loan forgiveness to start evaluating their options, including the potential Repayment Assistance Plan. The coming months will determine SAVE's fate, but the current signs point to an end of SAVE not by judicial decree but by legislative design.