Education Department tells 7.5 million SAVE borrowers to prepare for repayment

MoneyWatch Education Department tells 7.5 million student loan borrowers in "illegal" SAVE plan to prepare for repayment March 27, 2026 / 11:39 PM EDT / CBS/AP Add CBS News on Google More than 7 million student loan borrowers who have been enrolled in a Biden-era repayment plan will receive notices beginning Friday with instructions to seek a new plan to repay their debt, the Education Department said. Borrowers enrolled in the SAVE plan, which was struck down by a federal court earlier this month, have been in forbearance since July 2024 as a legal battle played out in courts. Starting July 1, loan servicers will begin issuing notices giving borrowers 90 days to select a new repayment plan. The available repayment plans will mean higher monthly payments for most of those borrowers. The Education Department called the plan "illegal," and said in a statement Friday it's based on "the false promise of student loan forgiveness and artificially low monthly payments." "Today's guidance, which every borrower enrolled in the defunct SAVE Plan will receive over the next week, puts the Biden Administration's illegal student loan bailout agenda to rest once and for all," Under Secretary of Education Nicholas Kent said in a statement. "For years, borrowers have been caught in a confusing cycle of uncertainty, but the Trump Administration's policy is simple: if you take out a loan, you must pay it back. When Alexis Arredondo graduated from the University of California, Los Angeles, in 2024 with a degree in microbiology, he struggled to find full-time work in research or public health. Instead, he began working part-time and freelancing for nonprofits in Southern California. A first-generation college student, he took on roughly $40,000 in student debt and enrolled in the SAVE plan upon graduation. Now, he said, he has to choose between paying more per month, which would be a struggle to afford, or a longer repayment period, which would increase how much he pays in interest. "It...