What we know about student loans and the Education Department
Will Education Department restructuring affect your student loans? Here’s what we know know.
- The Department of Education has agreed to a settlement to end the Biden-era SAVE student loan repayment plan.
- Over seven million borrowers currently on the SAVE plan will need to select a new repayment program if the court approves the settlement.
- Ohio has about 1.7 million student loan borrowers and over $60 billion in debt. The average student loan debt in the state is approximately $35,072.
Student loan borrowers under the Biden-era student loan repayment plan, Saving on a Valuable Education (SAVE), may soon have to select a new repayment plan after the U.S. Department of Education agreed to a measure to permanently end the program.
A proposed joint settlement agreement announced Tuesday between the DOE and the State of Missouri seeks to end what officials call the “illegal” SAVE program, impacting more than seven million SAVE borrowers who would have to enroll in another program. The settlement must be approved by the court before it can be implemented.
Ohio borrowers carry some of the nation’s highest student loan debt. Here’s how the proposed change could affect them.
What is the SAVE plan?
Originally known as REPAYE, the Saving on a Valuable Education (SAVE) plan was created to deliver the lowest monthly payments among income-driven repayment programs. Under the Biden administration, it became the most affordable option for borrowers.
According to USA TODAY, the SAVE plan was part of Biden’s push to deliver nearly $200 billion in student loan relief to more than 5 million Americans. It wiped out $5.5 billion in debt for nearly half a million borrowers and cut many monthly payments down to $0.
But officials in President Donald Trump’s administration claim the Biden plan was illegal.
Why does the Department of Education want to end the SAVE plan?
The DOE says the SAVE plan aimed to provide mass forgiveness without congressional approval, costing taxpayers $342 billion over 10 years. In a press release, the Department said the administration promised unrealistically low payments and quick forgiveness without legal authority.
“The Trump administration is righting this wrong and bringing an end to this deceptive scheme,” Under Secretary of Education Nicholas Kent said in a release. “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.”
If the agreement is approved by the court, no new borrowers will be able to enroll in the SAVE plan. The agency says it will deny any pending applications and move all SAVE borrowers back into other repayment plans.
Borrowers currently enrolled in the SAVE Plan would have a limited time to select a new repayment plan and begin repaying their student loans.
The DOE adds that it is working on the loan repayment provisions of the “One Big Beautiful Bill” Act, which created a new Income-Driven Repayment plan called the Repayment Assistance Plan (RAP), that will be available to borrowers by July 1, 2026.
How many people in Ohio have student loan debt?
Numbers from the Education Data Initiative show that there are about 1.7 million student loan borrowers in Ohio, carrying over $60 billion in debt. The average student loan debt is approximately $35,072.
Ohio also ranks No. 10 among the states with the most student debt, according to personal finance site WalletHub.
How much money does Ohio get from the Department of Education?
The DOE budget for Ohio for fiscal year 2025 is estimated to be more than $5.65 billion, The Columbus Dispatch previously reported.
President Trump announced his intentions to eliminate the Department of Education earlier this year, meaning that Ohio could lose more than $5 billion in annual funding.
