SAVE cut student loan payments and stopped balances from growing

SAVE was an income-driven repayment plan for federal student loans, so payments followed your income and family size, not how much you owed. Starting in July 2023, the plan shielded income up to 225% of the poverty line from your payment, up from 150%. That meant many lower-income borrowers owed nothing each month. If your payment didn’t cover the month’s interest, the leftover interest was dropped, so your balance couldn’t grow as long as you kept paying.

The plan replaced an older one called REPAYE, and other borrowers could switch in by applying. By March 2024, 7.5 million people had enrolled, and 4.3 million of them had a $0 payment. The rule also promised faster forgiveness: borrowers whose loans originally totaled $12,000 or less could have the rest cancelled after 10 years of payments. Payments on undergraduate loans were set to drop from 10% to 5% of discretionary income in July 2024.

President Joe Biden’s administration created the plan through a rule signed by Education Secretary Miguel Cardona. Missouri and six other Republican-led states sued, and in August 2024 a federal appeals court blocked the plan, leaving enrolled borrowers in limbo. In December 2025, the Trump administration agreed with Missouri to end SAVE, and in March 2026 the appeals court ordered that deal entered. More than 7 million borrowers now have to move to other plans.