Student Loan Forgiveness for Public Servants at Risk

A group of Democratic lawmakers has raised urgent concerns about a proposed settlement that would eliminate the SAVE student-loan repayment plan. The plan, created under the Biden administration, provides over 7 million borrowers with more affordable monthly payments and a shorter timeline to loan forgiveness.

The Trump administration's proposal would effectively end the program and require borrowers to transfer to existing plans with higher payments. This move could have significant consequences for those enrolled in the Public Service Loan Forgiveness (PSLF) program, which forgives student debt for government and nonprofit workers after 10 years of qualifying payments.

On Thursday, a group of Democratic lawmakers, including Sens. Jeff Merkley, Elizabeth Warren, Sheldon Whitehouse, and Tim Kaine, led their colleagues in a formal letter to Education Secretary Linda McMahon. They expressed deep concern over the Department of Education's proposed settlement to end the SAVE plan.

The SAVE plan, which was created by former President Joe Biden, was designed to give borrowers cheaper monthly payments with a shorter timeline to loan forgiveness. However, litigation halted the plan in 2024. President Donald Trump's administration recently announced a proposed settlement that would effectively eliminate the plan and require borrowers to transfer to an existing plan with higher payments.

Trump's "big beautiful" spending legislation originally called for eliminating SAVE by 2028, but this settlement would accelerate that timeline significantly.

"Forcing these borrowers to transition out of SAVE with little guidance risks further lost time to debt relief and payment increases that could render continued public service untenable."

The lawmakers highlighted specific risks for those enrolled in the Public Service Loan Forgiveness program. This program forgives student debt for government and nonprofit workers after 10 years of qualifying payments. While resuming payments on a different income-driven repayment plan would count toward PSLF, the transition presents significant challenges.

Borrowers have not received credit toward PSLF while on the SAVE forbearance period. The lawmakers noted that transitioning millions of borrowers to a new plan in a short timeframe would create a substantial administrative burden.

The letter to Secretary McMahon emphasized that borrowers are likely to face "significant hurdles" switching to a new plan, and those in public service are at heightened risk. The lawmakers requested that the Department of Education provide borrowers with at least six months to switch to a new plan before their next payment comes due.

• Loss of progress toward 10-year forgiveness timeline
• Higher monthly payments on alternative plans
• Administrative burden during transition
• Potential for increased financial strain

The Department of Education indicated that SAVE borrowers "will have a limited time" to select a new repayment plan once the settlement is finalized. Under Secretary of Education Nicholas Kent defended the administration's position in a statement.

"American taxpayers can now rest assured they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies."

While borrowers are still waiting for a court to approve the SAVE settlement, provisions of Trump's spending legislation—including new repayment plans and borrowing caps—are set to be rolled out beginning in July. These changes come as over 5 million borrowers are in default on their student loans, following the Trump administration's resumption of collections in May 2025 after a five-year pause.

The Education Department announced last week that it is temporarily pausing wage garnishment and tax refund seizures for defaulted borrowers. However, Democratic lawmakers warned in their letter that SAVE borrowers are at risk of defaulting should they face challenges transitioning to a new plan.

The SAVE plan controversy represents just one piece of a larger transformation in the student-loan system. The Trump administration's spending legislation includes multiple provisions that will reshape how millions of Americans repay their educational debt.

Beyond the SAVE settlement, borrowers face new repayment plans and borrowing caps scheduled for implementation beginning in July. These changes arrive during a period of heightened financial stress for many borrowers, with collections resuming in May 2025 after a five-year pause.

The Democratic lawmakers' letter emphasized the urgency of protecting current SAVE enrollees from financial hardship. They wrote that it is "imperative the Department take every action possible to ensure the 7 million borrowers currently enrolled in SAVE are provided with the information and resources necessary to avoid delinquency or default in order to avoid an even bigger default crisis."

As the court reviews the proposed settlement, borrowers remain in a state of uncertainty about their future payment obligations and forgiveness timelines.

The proposed settlement to eliminate the SAVE plan represents a significant shift in federal student-loan policy that could affect millions of borrowers. The transition timeline and available alternatives will be critical factors in determining the ultimate impact on borrowers' financial situations.

Democratic lawmakers continue to advocate for a more gradual transition period and additional resources to help borrowers navigate the change. The outcome of the court's review of the settlement will determine the final timeline for implementation and the specific options available to SAVE enrollees.

For now, borrowers enrolled in SAVE should monitor official communications from the Department of Education regarding next steps and prepare for potential changes to their repayment plans in the coming months.