Student loan borrowers are bracing for higher monthly payments after Trump decided to eliminate his affordable plan: ‘I’m bracing for an astronomical bill’
Student loan borrowers are bracing for higher monthly payments after Trump decided to eliminate his affordable plan: ‘I’m bracing for an astronomical bill’
Student loan borrowers said they are concerned about higher payments without the SAVE plan.Aaron Hawkins/Getty Images/iStockphoto
Trump announced a proposed deal to officially end the SAVE student loan repayment plan.
Borrowers said they are preparing for much higher monthly student loan payments.
Given the high costs of living, some borrowers said it’s not feasible to budget for a higher payment.
David Chatman, 51, files for bankruptcy.
A reason? Her monthly student loan payments are projected to increase from $86 to $689 now that President Donald Trump has moved to end the income-driven repayment plan Chatman was on.
The SAVE plan, created under former President Joe Biden, aimed to provide borrowers with cheaper monthly payments and a shorter term for debt relief. In early December, President Donald Trump’s administration announced a proposed deal to officially kill the plan.
“I’ve never been late on a credit card payment. I’ve never missed a student loan payment. But now it’s gotten to the point where life just isn’t feasible like that,” Chatman told Business Insider. He described his decision to file for bankruptcy as “the lesser of all evils.”
The fate of the SAVE plan has been uncertain for more than a year. After a group of GOP-led states sued to block the plan, more than 7 million enrolled borrowers were placed in forbearance in the summer of 2024. Trump’s Department of Education restarted interest charges on SAVE accounts in August, and if a court approves the department’s proposed settlement, enrolled borrowers will have a limited period to enroll in a different payment plan, and will likely face higher monthly payments.
Nicholas Kent, deputy secretary of education, said in a statement about SAVE’s proposed deal that “if you take out a loan, you have to pay it back.”
“American taxpayers can now rest assured that they will no longer be forced to serve as collateral for illegal and irresponsible student loan policies,” Kent said.
Chatman doesn’t see it that way. He has consistently made monthly payments since 2015, when he graduated from Oregon State University with a bachelor’s degree in microbiology with $63,000 in student debt. Now, however, you don’t have hundreds of extra dollars to maintain that amount without the SAVE plan while earning an hourly wage at a car dealership. Bankruptcy would allow you to pay off some of your debt and move forward financially.
“When I saw my payout was going to be a lot bigger, I just sat back and looked at it,” Chatman said. “There is no way. There is no way.”
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Like Chatman, Brenda McCoy is considering filing for bankruptcy if her payments increase once she exits the SAVE plan.
McCoy, 60, decided to advance her career and increase her income by returning to school to earn her master’s degree in social work, which she completed in 2018. She took out about $55,000 in student loans, which she was paying off until the pandemic forbearance hit. He signed up for the SAVE plan when it became available and said his payments were around $480. Without SAVE, expect monthly payments of more than $1,000.
“I’m bracing myself for an astronomical bill,” McCoy told Business Insider. “My goal was to be self-sufficient. I was making payments, I was being a responsible person, but it has to be something I can afford.”
The Department of Education recommended that SAVE borrowers enroll in an income-based repayment plan. IBR plans give borrowers monthly payments based on their income, with forgiveness after 20 or 25 years, depending on when they first applied for the loan.
The department has been updating the IBR plan to align it with changes Trump enacted in his “big, beautiful” spending legislation, including eliminating the partial financial hardship requirement for enrollment. It means higher-income borrowers would be eligible for IBR, and the department said it plans to complete this update in December.
Additionally, the department is working to implement its new Payment Assistance Plan, which will be implemented in July 2026. The plan would set borrowers’ payments between 1% and 10% of their income, depending on their income levels, and any remaining balance would be forgiven after 30 years.
It is less generous than the SAVE plan, and some education policy experts said SAVE borrowers should expect higher monthly payments.
“The SAVE plan had created a meaningful path for low- and middle-income people to move toward paying off their student loans while also making affordable monthly payments,” said Abby Shafroth, managing director of advocacy at the National Consumer Law Center. “Now, in the midst of a national affordability crisis, the path forward is murky and complicated.”
If the court approves the department’s proposed settlement, SAVE plan borrowers will receive more information from their servicers about next steps.
Jennifer Oakes, 41, said higher prices on her purchases, along with her house and car payments, have strained her budget, and she doesn’t know how she can afford to lose the $0 monthly payments she received in the SAVE plan.
“My overall feeling is anxiety and nervousness because we really don’t know what’s going to happen,” Oakes said. “I used to feel very comfortable knowing that the government was always looking out for us and making sure we didn’t get screwed. The general feeling, until recently, is quite the opposite.”
