Core Viewpoint - The proposed settlement by President Donald Trump's administration aims to eliminate the SAVE plan, which has raised concerns among student-loan borrowers about significantly higher monthly payments and financial strain [2][6]. Group 1: Impact on Borrowers - Borrowers like David Chatman are facing a drastic increase in monthly payments, projected to rise from $86 to $689, leading some to consider bankruptcy as a viable option [1][5]. - The SAVE plan, initiated under former President Joe Biden, was designed to offer borrowers lower payments and a quicker path to debt relief, but its future remains uncertain due to legal challenges [2][3]. - Over 7 million borrowers enrolled in the SAVE plan were placed on forbearance in the summer of 2024, and the restart of interest charges has further complicated their financial situations [3]. Group 2: Government Position - Nicholas Kent, the undersecretary of education, emphasized the necessity for borrowers to repay their loans, asserting that taxpayers should not bear the burden of what he termed "illegal and irresponsible student loan policies" [4]. - The proposed settlement to end the SAVE plan reflects a shift in policy that prioritizes loan repayment over borrower relief, which may lead to increased financial pressure on borrowers [2][4].

Major changes are coming to the federal student loan system in 2026. This overhaul, which primarily stems from the Trump administration's One Big Beautiful Bill Act (OBBBA), will reshape how students borrow and pay back student loans. These changes will take effect on July 1, 2026, for new loans, but existing borrowers will have a more gradual transition period or retain access to some current options. Here's a closer look at how and when student loans will change and what you can do now to prepare. 1. N ...